If National Income Accountants Fail to Make an Adequate Adjustment

question 43

Multiple Choice

If national income accountants fail to make an adequate adjustment for increases in the quality of goods and services over time,

• A) increases in real GDP will understate the growth rate of real output.
• B) increases in real GDP will overstate the growth rate of real output.
• C) the GDP deflator will overstate the rate of inflation.
• D) the GDP deflator will understate the rate of inflation.
• E) both a and c are correct.

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Definitions:

Subsequent Event

An event that occurs after the balance sheet date but before the financial statements are issued, which may affect the company's financial position or performance.

Financial Disclosure Requirements

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Financial Instruments

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