Which of the following statements describes the difference between real and nominal GDP?
A. Real GDP includes only goods; nominal GDP includes goods and services.
B. Real GDP is measured using constant base-year prices; nominal GDP is measured using current prices.
C. Real GDP is equal to nominal GDP less the depreciation of the capital stock.
D. Real GDP is equal to nominal GDP multiplied by the CPI.
Ans: B. Real GDP is measured using constant base-year prices; nominal GDP is measured using current prices.
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a. regressive; progressive b. regressive; proportional c. progressive; regressive d. proportional; progressive
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a. She receives a pay cut and her nominal wage falls by 5 percent, while the CPI falls by 20 percent. b. She receives a pay cut and her nominal wage falls by 5 percent, while the CPI increases by 10 percent. c. Her nominal wage remains the same, as does the CPI. d. She receives a raise and her nominal wage increases by 5 percent, while the CPI increases by 10 percent. e. She receives a raise and her salary increases by 5 percent, while the CPI falls by 5 percent.
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