The drawback to calculating real GDP using base-year prices is that
A) relative prices change over time and these are not reflected in base-year prices, and this distorts GDP.
B) quality changes are reflected in base-year prices.
C) relative prices change over time and these changes are reflected in base-year prices.
D) real GDP in one year is not comparable to real GDP in another year.
A
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According to the simple macroeconomic model presented in Chapter 3, which of the following will not be caused by an increase in government spending?
A. an increase in interest rate B. a decrease in consumption C. a decrease in investment D. an increase in government debt
Which of the following statements is FALSE?
A. The federal budget deficit in 2020 was about 4 percent of the GDP. B. The public debt of $10 billion is the accumulated debt of all U.S. individuals, firms, and institutions. C. A budget deficit of $10 billion in a given year increases the public debt by $10 billion. D. During the past five years, the U.S. public debt has been increasing.