Question

1.

When studying changes in the economy over time, economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services. In other words, economists want to study

	a.	the GDP deflator.
	b.	nominal GDP.
	c.	GNP.
	d.	real GDP.

2.

Macroeconomists find core measures of inflation informative because

		they give information about all prices in the economy
		they give information about inflation pressures arising from macroeconomic supply and demand forces
		they are calculated more often than their "headline" counterparts
		they determine cost of living for households

Answer 1

1. Option D.

• If the Economists wants a measure of the total goods and services that is not affected by the changes in the prices of those goods and services, then they must study Real GDP.
• Real GDP measures the changes in all the final outputs produced within a nation at constant price's.
• It is a measure of GDP which takes inflation into account while measuring the value of all the final goods and services.

2. Option B.

• Macroeconomists are very eager in learning about the problems or issues that are concerned about the whole economy.
• These economists find core measures of Inflation informative because, these measures give information about various inflationary pressures which arise from changes in supply and demand.