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:

Permanent/Temporary

Describes accounts in financial reporting; permanent accounts show ongoing financial status, while temporary accounts track revenues, expenses, and dividends over a specific period.

Normal Balance

The side (debit or credit) of an account that increases its balance, reflecting the account's role in the accounting equation.

Financial Statement

A formal record of the financial activities and position of a business, individual, or other entity, detailing assets, liabilities, revenue, and expenses over a specific period.

Permanent/Temporary

Used to classify accounts, with permanent accounts being those that carry their balances over into the next fiscal year, and temporary accounts being closed at the end of the fiscal year.