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:

Fixed Costs

Business expenses that are not affected by changes in the level of production or sales, such as rent and salaries.

Total Variable Costs

The sum of expenses that change directly with the level of output or production volume.

Average Fixed Cost

The total fixed costs of production divided by the number of units produced, indicating cost per unit.

Average Total Costs (ATC)

The total cost of production (fixed plus variable costs) divided by the total quantity of output produced.