Suppose Nominal GDP Was $360 Billion in Year 1 and $450

question 13

Multiple Choice

Suppose nominal GDP was $360 billion in year 1 and $450 billion in year 2. The price index was 120 in year 1 and 125 in year 2. Between year 1 and year 2, real GDP

• A) increased by $60 billion.
• B) decreased by $32 billion.
• C) increased by $100 billion.
• D) increased by $117 billion.

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Definitions:

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.

Additional Parts

Components or pieces beyond the basic requirements that are included in the manufacturing or assembly of a product.

Idle Capacity

Unused or underused production capability within a manufacturing facility, often resulting in inefficiency and lost potential revenue.

Full (Absorption) Cost

The total cost of a product that includes all direct and indirect costs, such as raw materials, labor, and overhead, required for its production.