Which of the following is not a problem for the traditional method of calculating realGDP using the prices of a fixed base year?New goods that did not have a base-year price may come onto the market.If prices have risen since the base year this method will understate the true rise in GDP.Some goods that were part of GDP prior to the base year may no longer be produced in thebase year.The measured real growth over any given period may differ depending on the choice of baseyear.

GDP: It refers to the goods and services produced in a year in the economy, which helps predict the…

Answered: traditional method

Business

Economics

traditional method

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter11: Gross Domestic Product

Section: Chapter Questions

Problem 4SQ

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Question

Which of the following is not a problem for the traditional method of calculating real
GDP using the prices of a fixed base year?
New goods that did not have a base-year price may come onto the market.
If prices have risen since the base year this method will understate the true rise in GDP.
Some goods that were part of GDP prior to the base year may no longer be produced in the
base year.
The measured real growth over any given period may differ depending on the choice of base
year.

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