If GDP Grows 8% in One Year and Inflation, Measured

question 211

True/False

If GDP grows 8% in one year and inflation, measured by the GDP deflator, grows by 6% over the same time period, then real GDP has increased.

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Definitions:

Direct Labor-Hours

The total number of work hours spent by employees who are directly involved in the manufacturing process.

Traditional Costing

An accounting method that allocates overhead costs to products based on a predetermined rate, often labor or machine hours.

Activity-Based Costing

An accounting method that identifies and assigns costs to specific activities, thereby more accurately reflecting the costs of products or services.

Overhead Rate

The total of indirect costs of production compared to a base activity measure, like labor hours, used to assign costs to products.