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Introducing Concepts - Nominal GDP and Real GDP quiz #1 Flashcards

Introducing Concepts - Nominal GDP and Real GDP quiz #1
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  • What does Gross Domestic Product (GDP) measure?
    GDP measures the value of all goods and services produced by a country in a specific year.
  • Which statement best describes the difference between nominal GDP and real GDP?
    Nominal GDP uses current year prices to value production, while real GDP uses constant base year prices to eliminate the effects of price changes.
  • What are the two supply-side elements that determine real GDP?
    The two supply-side elements of real GDP are the quantity of goods and services produced and the prices used to value them (with real GDP using constant base year prices).
  • Which of the following statements is the definition of real GDP?
    Real GDP is the value of goods and services produced in a country in a specific year, measured using constant prices from a chosen base year.
  • Which of the following is not included in U.S. GDP?
    Goods and services produced outside the United States are not included in U.S. GDP.
  • What is the importance of measuring per capita GDP in macroeconomics?
    Measuring per capita GDP allows economists to compare the average economic output per person, helping assess living standards and economic well-being.
  • Nominal GDP measures the value of all goods and services produced in an economy using current year prices. True or false?
    True. Nominal GDP uses current year prices to measure the value of production.
  • Nominal GDP differs from real GDP because:
    Nominal GDP uses current year prices, while real GDP uses constant base year prices to remove the effects of inflation or deflation.
  • True or false: Gross Domestic Product (GDP) cannot be used to measure the economy's income.
    False. GDP can be used to measure the economy's income, as it reflects the total value of goods and services produced.
  • Why does real GDP provide a more accurate comparison of production levels across years than nominal GDP?
    Real GDP uses constant base year prices, which removes the effects of inflation or deflation, allowing for a clearer comparison of actual production quantities between years.