Suppose Nominal GDP Increased in a Given Year

question 56

Multiple Choice

Suppose nominal GDP increased in a given year.Based on this information,we know with certainty that

• A)real output has increased.
• B)the price level (GDP deflator)has increased.
• C)real output and the price level (GDP deflator)have both increased.
• D)either real output or the price level (GDP deflator)have increased.
• E) real output has increased and the price level has decreased.

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Definitions:

Allowance for Doubtful Accounts

An estimation of accounts receivable that a company does not expect to collect, appearing as a contra-asset account on the balance sheet.

Net Credit Sales

The net income generated from credit sales after subtracting any returns or allowances.

Aging Analysis

A method used to estimate the collectability of accounts receivable by categorizing receivables by their age (time outstanding).

Uncollectible Accounts Expense

An expense account reflecting the cost of accounts receivable that a company does not expect to collect.