If Nominal GDP Rose by 10 Percent and the Price

question 77

Multiple Choice

If 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.

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Definitions:

Discount on Bonds Payable

The difference between the face value of a bond and its selling price, when the bond is sold for less than its face value.

Market Rate of Interest

The interest rate prevailing in the market for securities of similar risk and maturity.

Amortization

The gradual reduction of a debt over a period of time through regular payments that cover interest and principal.