Suppose the GDP Deflator Is Currently 115 While the Equilibrium

question 83

Multiple Choice

Suppose the GDP deflator is currently 115 while the equilibrium GDP deflator is 111. In this instance:

• A) an excess supply of goods and services will cause the deflator to increase.
• B) an excess supply of goods and services will cause the deflator to decrease.
• C) an excess demand for goods and services will cause the deflator to decrease.
• D) an excess demand for goods and services will cause the deflator to increase.

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Definitions:

Weak-Form Efficient

A theory stating that all past prices of a stock are reflected in its current price and that technical analysis cannot consistently outperform the market.

Above-Normal Rate Of Return

Earnings that exceed what is typically expected or required, often reflecting superior performance or risk.

Constant Rate

The steady, unchanging rate at which a quantity such as interest, growth, or decay progresses over time.

Dividend Yield

The ratio of a company's annual dividend payments to its share price, expressing the dividend as a percentage of the current share price.