Which Statement About Nominal and Real GDP Is Incorrect

question 49

Multiple Choice

Which statement about nominal and real GDP is incorrect?

• A) Real GDP per person is a better measure of standard of living than nominal GDP per person.
• B) Nominal GDP includes products and services produced within a country's borders, no matter what the nationality of the business doing the producing.
• C) Real GDP is measured as a stock.
• D) Nominal GDP is measured as a flow.
• E) If real GDP is higher this year than last year, this indicates positive economic growth.

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Definitions:

Return on Debt

A measure of a company's profitability relative to its total debt, indicating how effectively a company is using its borrowed funds.

Cost of Equity

The return that investors expect on their investment in a company, often calculated using models like the Capital Asset Pricing Model (CAPM).

Required Return

The minimum percentage return that an investor expects to achieve by investing in a particular asset.

M&M II

Modigliani and Miller Proposition II, a theory on capital structure, posits that the value of a firm is not affected by its capital structure under a certain market process.