Which of the Following Could Cause Nominal GDP to Increase

question 20

Multiple Choice

Which of the following could cause nominal GDP to increase and real GDP to decrease?

• A) The price level falls and the quantity of final goods and services produced falls.
• B) The price level falls and the quantity of final goods and services produced rises.
• C) The price level rises and the quantity of final goods and services produced falls.
• D) The price level rises and the quantity of final goods and services produced rises.

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Definitions:

Probability

A measure of the likelihood that an event will occur, ranging from 0 (impossibility) to 1 (certainty).

Expected Utility Function

A concept in economics that represents an individual's preference for certain outcomes over others, calculated as a weighted average of the utility of all possible outcomes, based on their probabilities.

Utility Function

In economics, a mathematical representation that ranks individuals' preferences over sets of goods and services, indicating the level of satisfaction or utility they obtain.

Risk Neutral

A risk neutral person or entity is indifferent between choices with different levels of risk, focusing solely on the expected outcome without concern for the variability of returns.