Assume an economy is producing only one product. Year 2 is the base year. Output and price data for a five-year period are given.YearUnits of OutputPrice Per Unit14$425537849951010Refer to the above data. If year 2 is chosen as the base year, then in determining real GDP, nominal GDP for:
A. years 1 and 2 must be deflated.
B. year 1 must be inflated.
C. years 3, 4, and 5 must be inflated.
D. year 2 must be deflated.
Answer: B
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If a perfectly competitive firm can sell each unit of output for $9, and the marginal cost of the last unit produced is $8.50, then the:
A. firm should lower its output level in order to increase profits. B. extra benefit of the last unit produced is less than the extra cost. C. firm is earning an average profit of $0.50. D. extra benefit of the last unit produced is greater than the extra cost.
Which of the following is not included in GDP?
a. the fees for legal services rendered by your attorney b. the replacement of brake pads on your six-year-old vehicle c. cash income paid to a day laborer that is not reported to the tax authorities d. the payments for a chiropractor's services
Supply and demand analysis
A. can be used to understand solutions to pollution, but not causes. B. can be used to analyze how externalities lead to environmental problems. C. cannot be used to analyze pollution, which is a physical and chemical problem. D. cannot be used to solve the pollution problem, but can be used to analyze it.
During the financial crisis of 2007–2009, both fiscal and monetary policy turned more expansionary.
Answer the following statement true (T) or false (F)