A Country Reports That Its Actual Real GDP Is Greater

question 255

Multiple Choice

A country reports that its actual real GDP is greater than its potential GDP.It must be that

• A)an error was made when calculating actual real GDP.
• B)the price level is increasing.
• C)more workers decided to quit work in order to enjoy leisure time.
• D)the excess by which real GDP exceeds potential GDP is only temporary,and eventually real GDP will decrease to be equal to potential GDP.
• E)None of the above answers is correct because it is impossible for a country's real GDP to exceed its potential GDP.

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Definitions:

Ordinary Annuity

An annuity in which the payments are made at the end of each payment interval.

Monthly Payments

Regular payments made every month, often in the context of loans or leases, to repay borrowed money plus interest.

Compounded Annually

The process of calculating interest on both the initial principal and the accumulated interest from previous periods on an annual basis.

Yearly Contributions

These are amounts of money contributed to any type of savings or investment plan on an annual basis.