In Recent Years, Technological Improvements and the Internet Have Substantially

question 191

Multiple Choice

In recent years, technological improvements and the Internet have substantially reduced transaction costs and expanded the availability of low-cost access to information, communications, and entertainment. Most economists believe that these changes

• A) cause GDP to overstate the growth rate of real output and the improvement in the well-being of people.
• B) cause GDP to understate the growth rate of real output and the improvement in the well-being of people.
• C) cause the consumer price index to increase more rapidly than the general level of prices.
• D) reduce the gains from trade and thereby cause GDP to decline.

---

Definitions:

Loss On Redemption

The financial loss experienced when a debt security is redeemed before its maturity date for more than its par value.

Carrying Value

The book value of an asset on a company’s balance sheet, calculated as the original cost minus accumulated depreciation.

Bonds

Long-term debt securities issued by corporations or government entities that pay periodic interest until maturity, at which point the face value is repaid.

Bond Premium

The extra amount by which a bond's market price exceeds its face value.