A Country Reported a Nominal GDP of $85 Billion in 2012

question 46

Multiple Choice

A country reported a nominal GDP of $85 billion in 2012 and $100 billion in 2011 and reported a GDP deflator of 100 in 2012 and 105 in 2011.What happened to real output and prices from 2011 to 2012?

• A)Real output and prices both rose.
• B)Real output rose and prices fell.
• C)Real output and prices both fell.
• D)Real output fell and prices rose.

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Definitions:

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold and treats fixed overhead expenses as period costs.

EBITDA

An acronym for Earnings Before Interest, Taxes, Depreciation, and Amortization, indicating a company's financial performance by measuring its profitability without considering financial, accounting, and tax effects.

Operating Income

The income generated from a company's primary business activities, before subtracting any interest and tax expenses.

Contribution Margin

The difference between the sales revenue of a product and its variable costs, used to cover fixed costs and generate profit.