Why does inflation make nominal GDP a poor measure of the increase in total production from one year to the next?
What will be an ideal response?
Nominal GDP can change because of either quantity changes or price changes. When there is inflation, nominal GDP overstates the increase in total production.
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Refer to the above figures. A tariff is placed on a foreign good. Which figure represents the situation in the domestic market for the foreign good?
A) Panel A B) Panel B C) Panel C D) Panel D
Discouraged workers are included in
a. the number of unemployed. b. frictional unemployment. c. the labor force. d. None of the above is correct.
Which of the following did not contribute to the law of diminishing control?
A. Regulations covered fewer financial instruments B. New financial institutions and instruments C. New monetary policy tools D. Political pressure to reduce regulations
The long-run average cost of production is defined as:
A. total cost divided by the quantity of output the firm chooses when at least one factor is fixed. B. total cost divided by the quantity of output the firm chooses when it can choose a production facility of any size. C. the quantity produced by a firm that can choose any size production facility. D. the quantity produced by a firm when at least one factor is fixed.