16. If all quantities produced rise by 5% and all prices fall by 5%, which of the following bestdescribes what occurs?a. Real GDP rises by 5%, while nominal GDP falls by 5%(6. Real GDP rises by 5%, while nominal GDP is unchangedc. Real GDP is unchanged, while nominal GDP rises by 5%d. Real GDP is unchanged, while nominal GDP falls by 5%

GDP is the value of final goods and services produced in the economy within a given period of time.

16. If all quantities produced rise by 5% and all prices fall by 5%, which of the following best describes what occurs? a. Real GDP rises by 5%, while nominal GDP falls by 5% b. Real GDP rises by 5%, while nominal GDP is unchanged c. Real GDP is unchanged, while nominal GDP rises by 5% d. Real GDP is unchanged, while nominal GDP falls by 5%

16. If all quantities produced rise by 5% and all prices fall by 5%, which of the following best describes what occurs? a. Real GDP rises by 5%, while nominal GDP falls by 5% b. Real GDP rises by 5%, while nominal GDP is unchanged c. Real GDP is unchanged, while nominal GDP rises by 5% d. Real GDP is unchanged, while nominal GDP falls by 5%

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Measuring A Nation's Income

Section: Chapter Questions

Problem 6CQQ

See similar textbooks

Similar questions

The Consumer Price Index is subject to the substitution bias and me quality/new goods bias. Are the Producer Price index and the GDP deflator also subject to these biases? Why or why not?
Suppose that over the last three years, there has been a 10% increase in real GDP, but a 5% increase in nominal GDP, we might conclude thata) The economy has entered a recession.b) The price level has increased, with 5% inflation.c) The price level has decreased, with 5% deflation.d) The economy has experienced a combination of low growth and inflation.
4. Compute the percentage increase in real GDP from 2004 to 2005.a. 0 percentb. 7 percentc. 22 percentd. 27 percent *base year is 2003
3. (National Income Accounting) Explain why intermediate goods and services usually are not included directly in GDP. Are there any circumstances under which they would be included directly? 4. (Nominal GDP) Which of the following is a necessary condition —something that must occur—for nominal GDP to rise? Explain your answers. a. Actual production must increase. b. The price level must increase. c. Real GDP must increase. d. Both the price level and actual production must increase. e. Either the price level or real GDP must increase 5. (Price Indexes) E-readers and HDTVs have not been part of the U.S. economy for very long. Both goods have been decreasing in price and improving in quality. What problems does this pose for people who are responsible for calculating a price index? 6. (Consumer Price Index) One form of the CPI that has been advocated by lobbying groups is a “CPI for the elderly.” The Bureau of Labor Statistics currently produces only indexes for “all urban…
a) Consider an economy that produces only chocolate bars. In year 1, the quantity producedis 3 bars and the price is $4. In year 2, the quantity produced is 4 bars and the price is $5.In year 3, the quantity produced is 5 bars and the price is $6. Year 1 is the base year.i. What is nominal GDP for each of these three years?ii. What is real GDP for each of these years?iii. What is the GDP deflator for each of these years?iv. What is the percentage growth rate of real GDP from year 2 to year 3?v. What is the inflation rate as measured by the GDP deflator from year 2 to year 3?
Consider an economy that produces only chocolatebars. In year 1, the quantity produced is 3 barsand the price is $4 per bar. In year 2, the quantityproduced is 4 bars and the price is $5 per bar.In year 3, the quantity produced is 5 bars and theprice is $6 per bar. Year 1 is the base year.a. What is nominal GDP for each of these three years?b. What is real GDP for each of these years?c. What is the GDP deflator for each of these years?d. What is the percentage growth rate of real GDPfrom year 2 to year 3?e. What is the inflation rate as measured by the GDPdeflator from year 2 to year 3?f. In this one-good economy, how might you haveanswered parts (d) and (e) without first answeringparts (b) and (c)?
1. Which of the following would not give us a measure of GDP?a) The aggregate value of all incomes received from participation in the economyb) The aggregate value of purchases of goods and services produced within the economy.c) The value added in production of goods and services in the economy.d) The value of all sales of goods and services in the economy. 2. Suppose that over the last three years, there has been a 10% increase in real GDP, but a 5% increase in nominal GDP, we might conclude thata) The economy has entered a recession.b) The price level has increased, with 5% inflation.c) The price level has decreased, with 5% deflation.d) The economy has experienced a combination of low growth and inflation. 3. In a simple closed economy, consumption is given by the relationship C=0.5Y, where C is consumption expenditure and Y is GDP. If government expenditure is £150 million and investment is £50 million, what will be the value of GDP of the economy?a) £200 millionb) £300 millionc)…