How does chain weighting lead to a different measurement of real GDP than the methods used by the BEA prior to 1996? What are the advantages of chain weighting? What are the disadvantages?
What will be an ideal response?
Prior to 1996, the growth rate of real GDP depended on which year was chosen as the base year. Now, however, the current year and preceding year are used as base years, averaging results using each as base year. The advantages of this method are that there is no longer a need to recompute historical data or to change base years. However, a disadvantage is that real GDP is no longer the sum of its components.
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William likes Dr. Pepper and pork sandwiches. When the price of pork sandwiches rises, the substitution effect causes Dr. Pepper to be relatively
a. more expensive, so William buys more Dr. Pepper. b. more expensive, so William buys less Dr. Pepper. c. less expensive, so William buys more Dr. Pepper. d. less expensive, so William buys less Dr. Pepper.
A straight-line demand curve has an elasticity that becomes smaller as we move from left to right along the schedule.
Answer the following statement true (T) or false (F)