Why is it important to distinguish nominal GDP from real GDP?
What will be an ideal response?
A distinction between nominal GDP and real GDP is important to know whether the economy has really grown or not. Only increases in real GDP indicate a true expansion in our nation's production that may translate into an increase in our average absolute standard of living.
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The long-run aggregate supply relationship refers to: a. a time period long enough for the prices of both outputs and inputs to adjust to changes in the economy. b. any time period of more than a year
c. a time period in which input prices can change, but output prices have not had time to adjust. d. a time period in which output prices can change but input prices have not had time to adjust.
The concept of economic rent would be more applicable to the earnings of
a. a secretary. b. Peyton Manning. c. a doctor or a lawyer. d. only a landowner.
Answer the next question on the basis of the following production possibilities tables for two countries, Latalia and Trombonia.Latalia's Production Possibilities ABCDEPork (tons)43210Beans (tons)05101520Trombonia's Production Possibilities ABCDEPork (tons)86420Beans (tons)06121824Assume that before specialization and trade, Latalia produced combination C and Trombonia produced combination B. If these two nations now specialize completely based on comparative advantage, the total gains from specialization and trade will be
A. 2 tons of pork and 4 tons of beans. B. 4 tons of beans. C. 4 tons of pork. D. 1 ton of pork and 2 tons of beans.
Suppose a bakery produces donuts using the following: the ingenuity of the bakery owner, a deep-fryer, wheat (made into flour), and a baker. Which of them would be considered capital?
a. The ingenuity of the owner b. The baker c. The wheat d. The deep-fryer