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Scenario: An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200.

Scenario: An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180.

A researcher finds that, for an economy, the nominal GDP in the year 2015 equaled the nominal GDP in the year 2016. She also finds that the output of the economy was the same over the two years. A situation like this is possible only if ________.

A) the annual inflation rate in the economy is 0 percent B) the annual inflation rate in the economy is negative C) the annual interest rate in the economy is negative D) the annual interest rate in the economy is 0 percent

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