Variables measured at current market prices are nominal, rather than real. In what sense are nominal variables unreal?
What will be an ideal response?
Nominal variables combine a thing being measured, such as economic activity, and the units of measurement, market prices. When prices change, the nominal variable is affected even if there has been no change in economic activity. Since such changes in nominal variables arise from a change in the units of measurement, rather than any change in whatever is being measured, the change is unreal.
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A financial intermediary's main function is to match ________ with excess funds to ________ with a shortage of funds
A) firms; insurance companies B) savers; borrower C) borrower; savers D) governments; households
Refer to Figure 3.1. Which of the following is true concerning Alvin's marginal rate of substitution?
A) It is diminishing. B) It is positive but varies along the indifference curve. C) It is constant. D) It is zero.
If an established domestic industry is in jeopardy of being displaced by lower-priced imports, there could be a rationale for
a. permanent import restrictions to prevent the decline of the domestic industry b. temporary import restrictions to allow the orderly adjustment of the domestic industry c. permanent import restrictions based on the infant industry argument d. temporary import restrictions based on the infant industry argument e. temporary import restrictions that will be replaced by permanent tax breaks for the domestic industry
Felix always consumes exactly four cookies with a glass of milk. Felix's indifference curves for cookies and milk would be:
A. linear. B. L-shaped. C. convex. D. positively-sloped.