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ECN 204 Chapter Notes - Chapter 4: Capital Good, Final Good, Price Level

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carminedog937
22 Apr 2011
School
Ryerson University
Department
Economics
Course
ECN 204
Professor
Thomas Barbiero

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Document Summary

4. 1 assessing the health of the economy: performance and policy. In assessing the health and development of an economy, macroeconomists focus on: real gdp. real gdp measures the value of the final good and services produced within the borders of a given country during a given time period, typically a year. to calculate real gdp, nominal gdp must first be calculated. a failure of the economy to fully employ its labour force. occurs when a person cannot get a job despite being willing to work and actively seeking work: inflation. an increase in the overall level of prices. can cause decreases in the standard of living. surprise jump in inflation reduced the purchasing power of people"s savings. 4. 2 the m i racle of modern economic growth. Modern economic growth refers to an increase in output per person as compared with earlier times in with output (but not output per person) increases.

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Related Questions

7. The difference between nominal GDP and real GDP is that nominal GDP:

  A.

measures a country's production of final goods and services at current market prices, whereas real GDP measures a country's production of final goods and services at the same prices in all years.
  B.

is measured in dollar terms, whereas real GDP is measured in terms of numbers of goods and services produced
  C.

measures the total value of only final goods and services, whereas real GDP measures the value of all goods and services, both intermediate and final
  D.

measures a country's production of final goods and services at fixed prices, whereas real GDP measures a country's production of all final goods and services at current market prices
Real GDP is preferred to nominal GDP as a measure of economic performance because:
A) nominal GDP uses current prices and thus may over- or understate true changes in output.
B) nominal GDP only includes goods and excludes services.
C) nominal GDP is not adjusted for population changes.
D) real GDP accounts for changes in the quality of goods and services produced.
) 
Why is real GDP a more accurate measure of an economy's production than nominal GDP? 
 
(i) Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.
(ii) Real GDP is not influenced by price changes, but nominal GDP is.
(iii) Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services an economy consumes.