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.

---

Definitions:

Merchandise Inventory

Items purchased by a company for the purpose of being sold to customers; considered a current asset on the balance sheet.

Accounts Payable

Money owed by a company to its creditors for goods or services that have been received but not yet paid for.

Prepaid Insurance

An asset account that represents insurance payments made in advance of the period in which the insurance coverage applies.