Suppose That Real GDP Increases by 5 Percent While the Population

question 159

Multiple Choice

Suppose that real GDP increases by 5 percent while the population of a country increases by 7 percent. In this situation,

• A) output per person necessarily increases.
• B) output per person necessarily decreases.
• C) output per person necessarily remains unchanged.
• D) there is not enough information to determine what happens to output per person.

---

Definitions:

Fixed Costs

Charges that stay the same, no matter the production or sales figures, such as rental fees, employee salaries, and insurance premiums.

Variable Utilities Cost

Expenses for utilities such as electricity and gas that vary in proportion to a company’s level of operation or production activity.

High-low Method

A technique used in managerial accounting to estimate fixed and variable costs associated with production.

Machine Hour

A unit measure representing the operation of one machine for one hour, used in costing and operational efficiency analysis.