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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Which of the following decisions cannot be taken by a firm in a perfectly competitive market?
a. Market exit decision b. Market price of the product c. Quantity of output it can produce d. Entering a market
The term or phrase most likely to indicate a normative statement is
A) "ceteris paribus." B) "factual." or "what is" statement. C) "holding other things constant." D) "should" or "ought to."