If Real GDP Rises While Nominal GDP Falls, Then Prices

question 130

Multiple Choice

If real GDP rises while nominal GDP falls, then prices on average have:

• A) risen.
• B) fallen.
• C) stayed the same.
• D) decreased and then been offset by an equal increase.

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Definitions:

FIFO

First-In, First-Out, an inventory valuation method where the first items placed in inventory are the first sold.

LIFO

An inventory valuation approach called Last In, First Out dictates that the newest items in inventory are the first to be accounted for as sold or used.

Cost of Goods Sold

Cost of Goods Sold represents the direct costs attributable to the production of the goods sold by a company, including material, labor, and overhead costs.

Lower-of-Cost

An accounting principle that states inventory is to be recorded at the purchase cost or the market value, whichever is lower.