Suppose That Population Grows by 2 Percent Annually

question 44

Multiple Choice

Suppose that population grows by 2 percent annually.For the standard of living to rise,which of the following must occur?

• A) Nominal GDP must grow by more than 2 percent.
• B) Real GDP must grow by more than 2 percent.
• C) Real GDP per capita must grow by more than 2 percent.
• D) Consumption spending must grow by more than 2 percent.
• E) Private investment spending must grow by more than 2 percent.

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Definitions:

Coupon Rate

The interest rate stated on a bond or other fixed income security that the issuer promises to pay annually or semi-annually.

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date, at a specified call price.

Market Interest Rate

The prevailing rate of interest available in the marketplace on comparable debt instruments, influencing the rates borrowers pay and lenders receive.

Coupon Rate

This rate is the yearly percentage of interest that a bond yields, calculated as a percentage of the bond's principal amount.