If Nominal GDP Rose by 10 Percent and the Price

question 77

Multiple Choice

If nominal GDP rose by 10 percent and the price index increased from 100 to 105 in a given year, real GDP:

• A)​rose by 15 percent.
• B)​rose by roughly 9.5 percent.
• C)​rose by 5 percent.
• D)​fell by 5 percent.

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Definitions:

Marginal Revenue

The additional income earned from selling one more unit of a good or service; it's a crucial concept for decision-making in businesses.

Economic Profit

The total revenue of a business minus its explicit and implicit costs, representing the surplus remaining after accounting for all costs, including opportunity costs.

Accounting Profit

The net income of a company after subtracting all costs and expenses from total revenues, as shown in the financial statements.

Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and products that are close substitutes, leading to price determination through supply and demand.