Use the Following Information to Answer the Next Several Questions

question 56

Multiple Choice

Use the following information to answer the next several questions:
Scenario 1: Imagine that an economy produces two goods, flashlights and fishing lures. In 2015, the economy produced 70 flashlights and 40 fishing lures, and the prices of flashlights and fishing lures were $5 and $12, respectively. In 2016, the economy produced 85 flashlights and 50 fishing lures, and the prices of flashlights and fishing lures were $7 and $15, respectively.
-Based on the information in Scenario 1, real GDP grew by about ________ percent from 2015 to 2016.

• A) 23
• B) 31
• C) 62
• D) 162

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Definitions:

Purchasing Power

The purchasing power of a currency, showing the quantity of goods or services one unit can acquire.

Nominal Interest Rate

The interest rate before adjustments for inflation, representing the face value of financial transactions.

Real Interest Rate

The interest rate adjusted for inflation, representing the true cost of borrowing and the true yield on savings.

Inflation Rate

The percent change in the price level of goods and services in an economy over a period of time, typically measured annually.