To study a macroeconomy, we calculate aggregate quantities in real terms because
A) we want to get rid of the illusion of price effects.
B) we want to concentrate on the production of real goods, as opposed to services.
C) it is then easier to take logarithms.
D) it is the only way to reconcile the three approaches to measuring GDP.
A
You might also like to view...
Rising health care spending is a problem confronting the federal government because
A) it is the government's job to make sure everyone receives the health care they need. B) federal spending on health care has increased rapidly over the last thirty years. C) the federal-funded VA hospitals have been expanding faster than government revenues can provide for. D) the medical expenses of federal employees has been rising at a rate much faster than for non-federal workers.
If a firm decreases production, then its:
A. variable costs decrease. B. fixed costs decrease. C. total costs stay the same. D. None of these is true.
Assume an indifference curve yields a consumer 1,000 utils of total utility. If the consumer's budget increases by 50 percent, then the indifference curve:
a. shifts rightward. b. shifts leftward. c. becomes more linear. d. is unchanged.
Suppose that the economy is in long-run equilibrium and the central bank decided to engage in unexpected expansionary policy by increasing the money supply. If we assume rational expectations, which of the following statements is correct about the effect of expansionary policy in the long run?
A. The unemployment rate will increase, real Gross Domestic Product (GDP) will increase and the price level will increase. B. The unemployment rate will decrease, real Gross Domestic Product (GDP) will decrease and the price level will decrease. C. The unemployment rate will remain unchanged, real Gross Domestic Product (GDP) will remain unchanged and the price level will increase. D. The unemployment rate will remain unchanged, real Gross Domestic Product (GDP) will remain unchanged and the price level will decrease.