Suppose in Current Dollar Terms, GDP Increased by Approximately 7

question 95

Multiple Choice

Suppose in current dollar terms, GDP increased by approximately 7 percent between one period and the next, but real GDP fell by 2 percent. Which one of the following explanations is most likely?

• A)Prices fell by 9 percent.
• B)Prices fell by 2 percent.
• C)Output rose by 2 percent.
• D)Prices increased by 7 percent.
• E)Prices increased by 9 percent.

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Definitions:

Rebate

A partial refund to someone who has paid too much money for tax, rent, or a utility.

Auction Without Reserve

A type of auction in which the item for sale will be sold regardless of the bid amount, without any minimum price threshold.

Cash Register

A machine used in shops to calculate and record sales transactions and to store money.

Expressed Contract

A legally binding agreement where the terms are explicitly stated either orally or in writing.