Real GDP in the Current Year Is Equal to Nominal

question 103

Multiple Choice

Real GDP in the current year is equal to nominal GDP in the current year multiplied by the

• A)GDP deflator.
• B)GDP deflator in the base year divided by the GDP deflator in the current year.
• C)GDP deflator in the current year divided by the GDP deflator in the base year.
• D)consumer price index.

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Definitions:

Fixed Assets

Long-term tangible assets used in the operations of a business, not expected to be converted to cash within a year.

Net Investment

The total amount of money spent on capital assets, such as buildings and machinery, minus any depreciation.

EBIT

Earnings Before Interest and Taxes, a measure of a firm's profit that includes all income and expenses (operating and non-operating) except interest and income tax expenses.

Operating Cash Flow

A measure of the cash generated by a company's normal business operations, indicating its ability to pay bills and fund investments.