Suppose That in 2011 Nominal GDP Increased and Real GDP

question 52

Multiple Choice

Suppose that in 2011 nominal GDP increased and real GDP decreased relative to the year 2010. It can be concluded that:

• A)​the economy experienced inflation and the total production of goods and services increased.
• B)​the economy experienced deflation and the total production of goods and services increased.
• C)​the economy experienced inflation and the total production of goods and services decreased.
• D)​the economy experienced deflation and the total production of goods and services decreased.

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Definitions:

Agency Approach

A mechanism used in financial management where one party (the agent) is allowed to act on behalf of another (the principal) in financial transactions or decisions.

Common Shares

Equity securities that represent ownership in a corporation, providing voting rights and entitling the holder to a share of the company’s success through dividends and/or capital appreciation.

Unamortized Premium

The portion of a bond premium that has not yet been amortized or gradually written off against earnings over the bond's life.

Wholly Owned Subsidiary

A company whose entire share capital is owned by another company, making it fully controlled by the parent company.