What are the two basic ways of deriving real GDP from nominal GDP?
What will be an ideal response?
The first method involves computing a price index. This index is a ratio of the price of a market basket in a given year to the price of the same market basket in a base year, with the ratio multiplied by 100. To obtain real GDP, divide nominal GDP by the price index expressed in hundredths.
In the second method, nominal GDP is broken down into prices and quantities for each year. Real GDP is found by using base-year prices and multiplying them times each year’s physical quantities. The GDP price index for a particular year is the ratio of nominal to real GDP for that year.
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A performance-based standard
a. specifies a pollution limit and lets polluters select the technology to achieve that limit b. is less flexible than a technology-based standard c. designates the equipment or control method to be used for pollution abatement d. none of the above
If the production technology in a Robinson Crusoe economy has increasing returns to scale, there is not competitive equilibrium.
Answer the following statement true (T) or false (F)
A market supply curve reflects the
A) marginal private costs of producing a good or service. B) marginal social costs of producing a good or service. C) external costs of producing a good or service. D) external benefits of producing a good or service.
In a competitive equilibrium all these relationships hold but one. Which one?
A) Nd=Ns B) Y=G+C C) G=T D) w=z