Your uncle comes to you with an investment idea. He tells you that the nominal GDP of Paradisia quadrupled over the past year and suggests that you invest there. Unemployment is at 20 percent and inflation over the last year was 500 percent. This opportunity seems like a:

A.) good investment given the expansion of money, the increase in real GDP, and the low unemployment rate.

B.)good investment given the neutrality of money, the increase in real GDP, and the low unemployment rate.

C.)poor investment given the neutrality of money, the decline in real GDP, and the high unemployment rate.

D.) poor investment given the neutrality of money, the increase in real GDP, and the high unemployment rate

The correct answer is C. This opportunity seems like a poor investment given the neutrality of money, the decline in real GDP, and the high unemployment rate.

Explanation:

In the present case, the country of Paradisia has had a growth in nominal GDP (that is, not updated by inflation or purchasing power) of 400%, but in turn has had annual inflation of 500%, with which the country's real GDP has not grown, but has instead contracted, since its currency has depreciated more than what its nominal production has grown.

In addition, it has an unemployment rate of 20%, which indicates a total lack of economic dynamism, that is, that there are not enough employers for all its inhabitants, which makes it presume an adverse economic scenario for investment.

Therefore, in view of these macroeconomic data, the proposed investment is inadvisable.

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