If Real GDP Equals $200 Billion This Year and Nominal

question 106

Multiple Choice

If real GDP equals $200 billion this year and nominal GDP equals $300 billion,the price level since the base year has increased

• A)$100 billion
• B)$200 billion
• C)50 percent
• D)100 percent
• E)33 percent

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Definitions:

Fixed Manufacturing Overhead

Costs that do not change with the level of production, such as rent, salaries, and insurance, related to the production process.

Departmental Predetermined Rates

These are rates used to allocate indirect costs to various departments based on estimated overhead and expected activity.

Machine-Hours

A measure of the amount of time machinery is in operation, used in manufacturing to allocate costs based on machine usage.

Overhead Rate

The rate at which overhead costs are allocated to products or services, typically based on direct labor hours, machine hours, or another allocation base.