Velocity in the Country of Shem Is Always Stable

question 95

Multiple Choice

Velocity in the country of Shem is always stable. In 2009, the money supply was $200 billion and the GDP price deflator was four times as high as it was in the base year. In 2010, the money supply increased to $240 billion, the price level increased by 15 percent, and nominal GDP equalled $1200 billion. By how much did real GDP increase between 2009 and 2010?

• A)20 percent
• B)4.35 percent
• C)2.17 percent
• D)There is not enough information to answer the question.

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Definitions:

Least-squares Method

A statistical technique used to determine the line of best fit by minimizing the sum of the squares of the differences between observed and estimated values.

High-low Method

A technique used in cost accounting to determine the variable and fixed components of a cost by analyzing the highest and lowest levels of activity.

Variable Cost

Expenses that fluctuate in direct proportion to the amount of production or sales, including items like labor and materials.

Machine Hour

A measure of production time, where costs are attributed based on the number of hours a machine is operated.