Distinguish between real and nominal GDP. Which one is a better measure of the business cycle?
What will be an ideal response?
Nominal GDP is the value of currently produced final goods and services measured in current year prices. Real GDP is the value of currently produced final goods and services measured in constant year prices. Nominal GDP can change based on both changes in the price level and the quantities of goods and services produced whereas real GDP only changes in response to changes in the quantities of goods and services produced. Real GDP is a better measure of the business cycle.
You might also like to view...
A firm should use marginal analysis when making a price-output decision.
Answer the following statement true (T) or false (F)
Which of the following is not a reason for the existence of imperfect competition in health care markets?
a. easy entry into industry b. restrictions on advertising c. economies of scale d. collusion
In monopolistic competition
A) firms can earn long-run economic profit due to product differentiation. B) firms are unable to earn economic profit over the long run. C) firms can only earn accounting profits over the long-run. D) firms can block entry.
As your wage increases, the ________ effect causes you to work more, but the ________ effect causes you to work less and demand more leisure
a. substitution; income b. income; substitution c. work; leisure d. leisure; work