Econ 8.3

¡Supera tus tareas y exámenes ahora con Quizwiz!

How does real GDP deal with the problem inflation causes with nominal GDP?

ALL of the Above

"If a recession is so severe that the price level​ declines, then we know that both real GDP and nominal GDP must​ decline."

Agree. If both output and prices are​ falling, then both real GDP and nominal GDP will fall.

"If real GDP stayed the same while nominal GDP declined between 2008 and​ 2009, then the GDP deflator must also

Agree. If nominal GDP declined between 2008 and​ 2009, then the GDP deflator must also have declined.

An article in the New York Times discussed the views of then Canadian Minister of Finance Joe Oliver on the effect of falling oil prices on the Canadian economy. According to the​ article, Oliver argued that​ "lower oil prices would have a broadly neutral impact on real...gross domestic​ product, but have a negative effect on nominal​GDP." ​Source: Scott​ Haggett, "Canada Pushes Back Budget to April Due to Market​ Instability," New York Times​, January​ 15, 2015. Oliver must be expecting the effect of lower oil prices to

lower the inflation​ rate, which would offset the reduction in nominal GDP.

In an economy with rising​ prices, compared to the base​ year,

nominal GDP is larger than real GDP in years after the base year.

If the GDP deflator in 2012 has a value of​ 98.0, then

prices have decreased 2 percent between the base year and 2012

Why does inflation make nominal GDPLOADING... a poor measure of the increase in total production from one year to the​ next?

When nominal GDP increases from year to year, the increase is due partly to changes in prices and partly to changes in prices and partly to changes in quantities

Indicate whether you agree or disagree with the following statements. ​"If nominal GDP is less than real​ GDP, then the price level must have fallen during the​ year."

Disagree. Nominal GDP is less than real GDP if the current price level is less than the base year price level. A fall in the price level during the year is neither necessary nor sufficient to cause nominal GDP to be less than real GDP.

"Whenever real GDPLOADING... ​declines, nominal GDPLOADING... must also​ decline."

Disagree. Real GDP falls if output falls. Nominal GDP can increase if output falls and prices rise.

How is the GDP deflator calculated?

GDP deflator= (Nominal GDP/ Real GDP)x 100

The percentage change in the real GDP between the two years. Between 2019 and​ 2020, the percentage change in real GDP between the two years was

More​ information, such as the value for nominal​ GDP, is needed to answer this question.

Over​ time, prices may change relative to each other. To take this change into​ account, the Bureau of Economic Analysis calculates

Real GDP using chain weights.

As of​ 2019, 19 countries in Europe had adopted the euro as their common currency. These countries are called the euro zone. According to an article in the Wall Street Journal​, ​"The European​ Union's statistics agency said the combined GDP of the​ eurozone's 19 members increased by an annualized​ 1.5% in the three months through​March." ​Source: Paul​ Hannon, "In Show of Resilient Global​ Growth, Europe Regains​ Momentum," Wall Street Journal​, April​ 30, 2019. Is it likely that the article is referring to the growth in nominal GDP or the growth in real​ GDP? Briefly explain.

Real​ GDP, because it shows how the​ economy's overall production of goods and services changes over time.

Real GDP is

The value of goods and services evaluated at base year prices.

Suppose that the GDP deflator for the United States increases from 115 to 120 between 2019 and 2020. Briefly explain what this information tells you​ about: i. The percentage change in the overall price level between the two years. Between 2019 and​ 2020, the overall price level measured by the GDP deflator increased by _____ percent. ​(Enter your response rounded to two decimal​ places.)

To calculate the percentage​ change, use the​ formula: (new price- old price/ old price)x 100 ((120-115)/115)x100=4.347 round two places so we get 4.35

If prices rise over​ time, then real GDP will be

larger than nominal GDP in years before the base year.


Conjuntos de estudio relacionados

NUR 301 | Chapter 18: Nursing Management--Patients With Vascular Disorders and Problems of Peripheral Circulation

View Set

Standard Position, Coterminal and Reference Angles-!!

View Set

MATERNITY 1: reproductive 1; antepartum 47; labor/delivery 25

View Set

NU272 EAQ Evolve Elsevier NU272 HESI Prep: Med-Surg Musculoskeletal

View Set

PATH 370 - In Class quiz 2 (ch. 10, 11, 13, 14, 15)

View Set