Question

1. Explain the difference between real GDP and nominal GDP. 2. Discuss the reasons that explain...

1. Explain the difference between real GDP and nominal GDP.

2. Discuss the reasons that explain why GDP is not a perfect measure of economic activity in a country (hint, there are four main reasons

3. What does GDP per capita tell us about a nation's economy? What issues does conventional GDP methodology exclude?

4. Explain how “good institutions” enhance the incentives for entrepreneurship

5. Why are property rights important for economic development?

Homework Answers

Answer #1

Answer: 1) GDP measures the money value of goods and services in a specific time period. The differences real GDP and nominal gdp are following :

Real GDP : Real GDP adjusts the inflation level of the economy. Real GDP measures the quantities of current year goods and services at base year price level. This measure only shows the growth level of an economy. The formula of real GDP is

Real GDP = Current year quantity × Base year price

Nominal GDP : Nominal GDP does not adjust the inflation level. Nominal GDP measures the current year quantities of good and services at current year price level. And hence often times nominal GDP becomes higher than the real GDP. The formula of nominal GDP is

Nominal GDP = Current year price × Current year quantity.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain the difference between nominal and real GDP. Which of the two is a better measure...
Explain the difference between nominal and real GDP. Which of the two is a better measure of economic growth? Why?
1)    Explain what is the difference between real and nominal GDP? 2 ) and explain why do...
1)    Explain what is the difference between real and nominal GDP? 2 ) and explain why do economists need to make this distinction? 3)   Is the CPI a biased measure of the inflation rate? Explain your answer.
Explain the difference between nominal and real GDP and why real GDP is necessary to compare...
Explain the difference between nominal and real GDP and why real GDP is necessary to compare prior years’ data.
This exercise deals with the difference between nominal and real GDP, and also explores the characteristics...
This exercise deals with the difference between nominal and real GDP, and also explores the characteristics of the components of GDP over time. Show all work and formulas Instructions Go to BEA.gov and in the U.S. Economic Accounts find Table 1.1.5 (nominal GDP) and Table 1.1.6 (real GDP) and download them for the period 1960 to the latest available year in annual frequency (yearly). In Excel plot line 1 of both tables within a single graph. Where do they cross?...
1. Describe what GDP per capita measure and Sources of productivity growth. 2. Explain how government...
1. Describe what GDP per capita measure and Sources of productivity growth. 2. Explain how government policy affects economic growth. 3. Describe briefly the major impediments to policy success. 4. Explain in your own words why we trade with other countries.
1.Briefly explain some reasons for why fertility rates have fallen in the world 2.To what extent...
1.Briefly explain some reasons for why fertility rates have fallen in the world 2.To what extent is investment in education a necessary condition for economic development? Discuss the two theories on this issue. 3.What are the problems with setting a poverty line in a poor country?
1. Explain two main reasons why we need to study public finance 2. Distinguish between the...
1. Explain two main reasons why we need to study public finance 2. Distinguish between the “organic view” and “mechanistic view” of the existence of government 3. Explain the concept of market failure and discuss five reasons why there is market failure 4. What is meant by market failure? Identify and discuss four conditions under which the market fails to optimally allocate resources. 5. What is meant by the term government failure and explain five reasons why there may be...
Answer True or False: 1. Classification criteria for economic system include decision-making systems, mechanisms for information...
Answer True or False: 1. Classification criteria for economic system include decision-making systems, mechanisms for information and coordination, incentive structures, property rights, and mechanisms for public choices. 2. All economic systems can be classified as market capitalism or centrally planned socialism. 3. Generally speaking, transition economies emerging from the former Soviet Union have done least well with transition, while those of Central and Eastern Europe have done the best. 4. Capitalism relies primarily on material incentives, while planned socialism and...
1. In which phase of the business cycle is the U.S. economy currently in? ________________. How...
1. In which phase of the business cycle is the U.S. economy currently in? ________________. How many months has the U.S. economy been in this stage of the business cycle? ___________ months 2. How long has the current expansion/recovery lasted to date? _________________ How does this compare to the average length of U.S. recessions since 1854? ______________________________. 3. What do the last four recoveries/expansions (that is, the current recovery/expansion and the previous three recovery/expansions), suggest about a new trend in...
Discuss ethical issues that can be identified in this case and the mode of managing ethics...
Discuss ethical issues that can be identified in this case and the mode of managing ethics Enron finds itself in this case. How would you describe the ethical culture and levels of trust at Enron? Provide reasons for your assessment. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT