Nominal GDP Is Less Than Real GDP in an Economy

question 107

Multiple Choice

Nominal GDP is less than real GDP in an economy in both year 1 and year 2.In year 3, nominal GDP is equal to real GDP.In year 4, nominal GDP is slightly greater than real GDP.In year 5, nominal GDP is significantly greater than real GDP.Which year is the base year being used to calculate the price index for this economy?

• A)2
• B)3
• C)4
• D)5

Recognize the cost constraint in providing financial information.

Understand the basic assumptions underlying financial accounting, such as the going concern assumption.

Identify and understand the elements of financial statements (assets, liabilities, equity, revenue, and expenses).

Comprehend the rationale behind using historical cost for asset valuation in financial statements.

---

Definitions:

Group Polarization

The tendency for a group's prevailing attitudes or beliefs to become more extreme following discussion among group members.

Risky Shift

Is the phenomenon where groups tend to make riskier decisions together than individuals would on their own, often attributed to the diffusion of responsibility.

Selective Perception

The process where individuals selectively interpret what they see based on their interests, background, experience, and attitudes.

Perceptual Bias

is the tendency for perception to be affected by recurring thoughts, beliefs, or attitudes, leading to distorted interpretations of information.