If We Knew That Nominal GDP Was Currently $5

question 75

Multiple Choice

If we knew that nominal GDP was currently $5.4 trillion,and that GDP in dollars of 1997 purchasing power was $3.6 trillion,what would we know about the GDP price index?

• A)It would be 0.667.
• B)It would be 150.
• C)We would know nothing until we had current information on the price level.
• D)We would know only that a dollar buys more currently than it bought in 1997.
• E)It indicates that substantial deflation has occurred since 1997.

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Definitions:

Dividends

Funds disbursed by a company to its shareholders, frequently as an allocation of earnings.

Retained Earnings

The portion of a company's profit that is held back and not distributed to shareholders as dividends, often reinvested in the business.

Cash Available

The amount of liquid assets that are readily available for use by a company or individual.

Retained Earnings

Retained Earnings refer to the portion of net income that a company keeps after paying out dividends to its shareholders, which is then reinvested in the business or used to pay off debt.