Question

Suppose the total market value of all the final goods and services produced in the country of Rushya was $8 billion in 2008 (measured in 2008 prices) and $9 billion in 2009 (measured in 2009 prices). Which of the following statements is definitely correct?
a. Production increased in Rushya between 2008 and 2009.
b. Real GDP increased in Rushya between 2008 and 2009.
c. Average price levels increased in Rushya between 2008 and 2009.
d. Whether real GDP increased cannot be determined with the information given.

Answer 1

Answer:

The correct option is D which is Whether Real GDP increased cannot be determined with the information given.

Explanation:

The information given only indicates an increase in the overall total market value over the 2 years. In this context

Option A cannot be considered definitely correct as the total market value could be increased by both the increase of Production or Price Levels.

Option B cannot be considered definitely correct as the real GDP is dependent on other variables as compared to the total market value.

Option C cannot be considered definitely correct as the total market value could be increased by both the increase of Production or Price Levels.

So only option D is correct.