Since real GDP is adjusted for inflation and nominal GDP is not, nominal GDP must always be higher than real GDP. Do you agree or disagree? Why?
What will be an ideal response?
Disagree. It depends on whether the year being examined is before or after the base year. If after the base year, then nominal GDP will always exceed real GDP if inflation has occurred. If before the base year, then nominal GDP will always be less than real GDP if inflation has occurred. If the year being examined is before the base year and inflation has occurred, then the base year prices will exceed the prices of that year.
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An economy has two workers, Paula and Ricardo. Every day they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Paula to produce one computer?
A. 1 shirt B. ¼ shirt C. ½ shirt D. 4 shirts
The optimal amount of pollution abatement is such that
A) the total benefit of reducing pollution is equal to the total cost of reducing pollution. B) the marginal private cost of reducing pollution is just equal to the profit of the polluting firms. C) there is no remaining pollution. D) the marginal social cost of reducing pollution is just equal to the marginal social benefits from doing so. E) none of the above; there is no optimal amount of pollution abatement.
In 2011, Standard & Poor's (S&P) changed its rating on U.S. Treasury bonds from ________ based on the state of the federal government's budget deficit
A) "A" to "D" B) "A" to "AAA" C) "A+" to "B+" D) "AAA" to "AA+"
Countries engaged in international trade specialize in production based on:
A. relative levels of GDP. B. comparative advantage. C. relative exchange rates. D. relative inflation rates.