If a Country Experienced Deflation, Then

question 4

Multiple Choice

If a country experienced deflation, then

• A) the nominal interest rate would be greater than the real interest rate.
• B) the real interest rate would be greater than the nominal interest rate.
• C) the real interest rate would equal the nominal interest rate.
• D) nominal GDP would be greater than the money supply.

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Definitions:

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a business over a specific period.

Net Income

The net income of a business following the subtraction of all costs and taxes from the total earnings.

Ending Inventory

Ending inventory is the total value of goods available for sale at the end of an accounting period, calculated using the beginning inventory, additions, and subtractions of goods sold.

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life.