In Periods When Prices Are Falling,on Average

question 90

Multiple Choice

In periods when prices are falling,on average,

• A)real GDP will grow slower than nominal GDP.
• B)real GDP will grow faster than nominal GDP.
• C)real GDP will grow as fast as nominal GDP.
• D)one cannot calculate real GDP.

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Definitions:

Compounded Monthly

The monthly exercise of determining interest by applying it to the initial principal amount as well as to the interest that has been accumulated over preceding periods.

Accrued Interest

Interest that has been incurred but not yet paid.

Initial Loan

The original amount of money borrowed or the starting balance of a loan before any payments or interest are applied.

Compound Annual

Refers to the method of calculating interest where interest is added to the principal, so that, from that moment on, the interest that has been added also earns interest.