If Nominal GDP Increases by 4 Percent, Then

question 137

Multiple Choice

If nominal GDP increases by 4 percent, then

• A) real output has increased by 4 percent
• B) the price level has increased by 4 percent
• C) consumer spending must have increased by 4 percent
• D) it is possible that all of the increase was caused by an increase in the price level
• E) net exports increased by 4 percent

---

Definitions:

Payback Period

The amount of time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.

Hurdle Rate

The minimum rate of return on an investment that a company or investor expects to earn, used as a benchmark for funding projects.

Capital Outlay

Expenditure for acquiring, maintaining, or improving fixed assets such as buildings, equipment, or land, that have a long-term use or value.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization.