What is the difference between real and nominal GDP? If the president of the United States (or your instructor) asked you to evaluate the economy over the past five years, which one would you use and why?
Real GDP is nominal GDP adjusted for the effects of inflation. Mathematically, real GDP (in constant base-year dollars) equals nominal GDP multiplied by 100 divided by the GDP deflator. An increase in nominal GDP may be due to increases in production of goods and services, or it may simply be due to an increase in prices. For this reason, real GDP is a better variable for evaluating the performance of the economy over several years.
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Use the following diagram to answer the next question.
Which of the following statements about this market is not correct?
A. A wage rate of $5 maximizes the number of workers employed. B. Employers would benefit from a higher wage since they could profitably attract more workers. C. At a wage rate greater than $5 less than 500 workers would be employed. D. At a wage rate less than $5, less than 500 workers are supplied, so no more can be employed.
The demand curve is the same as another curve. Which curve is the same as the demand curve? Why are the curves the same?
What will be an ideal response?
If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket, then
A) changes in the CPI are unrelated to the true rate of inflation. B) changes in the CPI understate the true rate of inflation. C) changes in the CPI overstate the true rate of inflation. D) changes in the CPI accurately reflect the true rate of inflation.
While vacationing in Turkey you see a rug you consider purchasing. The seller tells you the rug costs 1,200 Turkish lire. A. If the exchange rate is .60 lira per dollar, how many dollars does the rug cost? B. If the dollar depreciates against the lira, will it take more or fewer dollars to buy the rug? Explain