Suppose That Nominal GDP in 2017 Was Less Than Real

question 33

Multiple Choice

Suppose that nominal GDP in 2017 was less than real GDP in 2017.Given this information, we know for certain that

• A)the price level in 2017 was greater than the price level in the base year.
• B)the price level in 2017 was less than the price level in the base year.
• C)real GDP in 2017 was less than real GDP in the base year.
• D)real GDP in 2017 was greater than real GDP in the base year.
• E)this is impossible, nominal GDP must always be greater than real GDP.

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Definitions:

Zero Coupon Bond

A debt security that does not pay periodic interest (coupon) payments and is instead issued at a substantial discount to its face value, with the return being the difference between the purchase price and the face value at maturity.

Current Yield

The current yield is a financial metric that calculates the annual income (interest or dividends) an investment generates, divided by its current price.

Yield to Maturity

The complete yield expected from a bond assuming it is retained until it matures.

Yield to Call

The rate of return anticipated on a bond if it is held until the call date, which is before the bond's maturity, including all interest payments and the call price.