If the Nominal GDP Rises by 6 Percent and the Price

question 46

Multiple Choice

If the nominal GDP rises by 6 percent and the price level rises by 3 percent, then the real GDP ________ by ________.

• A) falls; 3 percent
• B) rises; 9 percent
• C) rises; 3 percent
• D) falls; 9 percent
• E) None of these answers are correct.

Distinguish between the short-run application of the law of diminishing returns and its implications.

Relate the concepts of marginal and average products to decision-making in production.

Understand how the law of diminishing marginal returns impacts total production.

Understand the concept and applications of satisficing in decision making.

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Definitions:

Liabilities

Financial obligations or debts that a company owes to outside parties, including loans, accounts payable, mortgages, and accrued expenses.

Stockholders' Equity

The equity capital that is contributed by shareholders plus the retained earnings of the company. It represents the residual value of assets after liabilities have been settled.

Creditors' Risk

The risk that debtors will default on their obligations, resulting in financial loss for creditors.

Verifiable

The characteristic of information that can be checked for accuracy and reliability.