Author Question: Why does inflation make nominal GDP a poor measure of the increase in total production from one year ... (Read 18 times)

809779

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Why does inflation make nominal GDP a poor measure of the increase in total production from one year to the next?
 
  What will be an ideal response?

Question 2

Refer to Figure 2-5. If the economy is currently producing at point X, what is the opportunity cost of moving to point W?
 
  A) 19 million tons of steel B) 5 million tons of paper
  C) 9 million tons of paper D) 3 million tons of steel



pratush dev

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Answer to Question 1

Nominal GDP can change because of either quantity changes or price changes. When there is inflation, nominal GDP overstates the increase in total production.

Answer to Question 2

D



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