Quiz 2

An increase in the price of bread produced domestically will be reflected in...

...both the GDP deflator and the consumer price index

In the calculation of the CPI, tea is given greater weight than beer if...

...consumers buy more tea than beer.

Changes in nominal GDP reflect

Both changes in prices and changes in the amounts being produced.

When the overall level of prices in the economy is increasing, economists say that the economy is experiencing

Inflation

The consumer price index is used to

Monitor changes in the cost of living over time

Changes in the GDP deflator reflect

Only changes in prices.

When economists talk about growth in the economy, they measure that growth as the

Percentage change in real GDP from one period to another.

The inflation rate is the

Percentage change in the price level from one period to another.

If nominal GDP doubles and the GDP deflator doubles, then real GDP

Remains constant.

Which of the following is correct? a. Nominal GDP is always greater than real GDP. b. Nominal GDP equals real GDP in the base year. c. Nominal GDP is always less than real GDP. d. Nominal GDP equals real GDP in all years but the base year.

b. Nominal GDP equals real GDP in the base year.