When Real GDP Declines in a Particular Year, Nominal GDP

question 138

Multiple Choice

When real GDP declines in a particular year, nominal GDP:

• A)​will decline at a faster rate than real GDP if there is inflation.
• B)​will decline at a slower rate than real GDP if there is inflation.
• C)​may increase or decrease if there is inflation.
• D)​will increase if there is deflation.

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Definitions:

Direct Labor

The labor costs that can be directly attributed to the production of goods or services, such as wages for workers who assemble a product.

Standard Cost System

An accounting system that uses predetermined costs for product costing and variance analysis.

Variable Manufacturing Overhead

Costs in manufacturing that vary with production volume, such as supplies and utilities directly involved in the production process.

Machine-Hours

A unit of measure that represents the operation of one machine for one hour, used in manufacturing to allocate costs based on machine usage.