If Nominal GDP Is $5 Trillion and Real GDP Is

question 1

Multiple Choice

If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator is:

• A) 0.8
• B) 1.25
• C) 80
• D) 125

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Definitions:

Property Rights

Legal principles that define the ownership and use of resources, including the ability to transfer, exclude, and derive benefits from them.

Coase Theorem

A theory asserting that if property rights exist and transaction costs are low, externalities can be efficiently resolved through private negotiations regardless of the initial allocation of property.

Externality

An indirect outcome or repercussion of business or industrial activities that impacts external entities without being accounted for in the pricing of the involved products or services.

Acid Rain

Precipitation that contains a high level of sulfuric or nitric acids, often due to air pollution from burning fossil fuels.