Japan experienced periods of deflation—a declining price level—during the 1990s. During a deflationary period, which would be higher: nominal GDP or real GDP? Why? Assume that the base year of choice is prior to the deflationary period
What will be an ideal response?
Real GDP would be higher, as long as the base year was before the period of deflation. Nominal GDP would be measured using the lower prices that resulted from the deflation. Real GDP would use the higher prices before the deflation, assuming the base year was before the deflation.
You might also like to view...
________ is defined as a sustained ________ in the price level
A) Inflation; fall B) Deflation; fall C) Deflation; rise D) Answers A and C above are both true.
The manner in which one oligopolist reacts to a change in price, output, or quantity on the part of another oligopolist in the industry is known as
A) a positive-sum game. B) the reaction function. C) a noncooperative game. D) a zero-sum game.
The Sherman Antitrust Act was passed in:
a. 1890. b. 1914. c. 1929. d. 1933.
The United States' economy is the largest in the world because
A.) it has a high quantity and quality of capital resources. B.) the government directs resources to the most desirable outcomes. C.) it has abundant natural and human resources. D.) Both A and C are correct.