In Nominal GDP Rose by 10 Percent and the Price

question 160

Multiple Choice

In 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.
• E)rose by 50 percent.

Identify capital expenditures in various scenarios.

Understand and calculate depreciation using different methods including straight-line, double-declining-balance, and units-of-output.

Understand the accounting treatment for exchanges of similar and dissimilar assets.

Comprehend the acquisition and capitalization of fixed assets, including costs involved and their classification.

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Definitions:

M1

A measure of the money supply that includes physical currency and coin, demand deposits, traveler's checks, and other checkable deposits.

M2

A measure of the money supply that includes cash and checking deposits (M1) as well as near money, such as savings deposits and money market securities.

Store of Value

An asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved.

Price Level

A measure of the average prices of goods and services in an economy, often used to assess inflation or deflation.