Equivalent ofConsumer
Answer to Problem 1CQQ
Option ‘c’ is the correct answer.
Explanation of Solution
Option (c)
Option (a)
Nominal GDP measures the value of the economic output at current market prices. So option ‘a’ is incorrect.
Option (b)
Real GDP measures the value of the economic output adjusted for price changes. Hence option ‘b’ is incorrect.
Option (d)
Concept Introduction:
Consumer Price index (CPI): It is a measure that examines the changes in price levels of a basket of consumer goods and services for the present time from base year.
Inflation rate: Inflation rate refers to the rate of change in the price level.
GDP deflator: Gross Domestic Product (GDP) deflator is the measure of inflation.
Real GDP: Real GDP refers to the market value of all final goods and services produced in an economy during an accounting year, and measured in constant prices.
Nominal GDP: Nominal GDP refers to the market value of all final goods and services produced in an economy during an accounting year, measured in current prices.
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Essentials of Economics (MindTap Course List)
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- Use your CPI Chart to calculate the numbers 2-4. 2. If you made $38,000 in 1997, how much money would you have to make in 2006 to maintain your real income? Explain.arrow_forwardExplain what is the difference between CPI and GDP deflator?arrow_forwardIn Brazil, the reference base period for the CPI is 2000. By 2005, prices had risen by 51 percent since the base period. The inflation rate in Brazil in 2006 was 10 percent, and in 2007, the inflation rate was 9 percent. Calculate the CPI in Brazil in 2006 and 2007. Brazil's CPI in 2008 was 173. Did Brazil's inflation rate increase or decrease in 2008?arrow_forward
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