Which is better for making comparisons over time, nominal GDP or real GDP, and why?
What will be an ideal response?
Nominal GDP is the market value of all final goods and services produced within a given time period in the dollars of that period. Real GDP is the market value of all final goods and services produced within a given time period, adjusted for inflation. Because real GDP does not include price level changes, it allows more accurate comparison of production over time. Nominal GDP is not good for making comparisons because it is impossible to determine if output or only prices have changed.
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In the final two decades of the twentieth century, average per capita global income
A) decreased by approximately 6 percent. B) increased by approximately 35 percent. C) increased by more than 75 percent. D) remained relatively unchanged.
If the long-run supply of rice is perfectly elastic, then
A) as people's incomes rise, the quantity of rice supplied decreases. B) as the price of corn falls, the quantity of rice demanded decreases. C) in the long run, a large rise in the price of rice causes no change in the quantity of rice supplied. D) in the long run, an increase in the demand for rice leaves the price of rice unchanged.