Suppose That an Economy's Output Does Not Change from One

question 52

Multiple Choice

Suppose that an economy's output does not change from one year to the next, but the price level doubles. What happens to nominal GDP?

• A) Nominal GDP doubles.
• B) Nominal GDP is halved.
• C) Nominal GDP doesn't change.
• D) There is not enough information to determine what happens to nominal GDP.

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Definitions:

Conversion Price

The predetermined price at which convertible security can be exchanged for another asset, often shares of the issuing company's stock.

Coupon

The annual interest rate paid on a bond, expressed as a percentage of the face value, and paid from issue date until maturity.

Conversion Premium

The additional cost over the current market value of a convertible security that an investor pays to have the option to convert it into a set number of shares.

Conversion Price

The predetermined price per share at which a convertible bond or preferred stock can be converted into common stock.