« previous next »

Author Question: An economy that trades freely with the rest of the world is called a(n) ________ economy. A) ... (Read 61 times)

sam.t96

  • Hero Member
  • *****
  • Posts: 570
on: Jun 30, 2018
An economy that trades freely with the rest of the world is called a(n) ________ economy.
 
  A) command B) communist C) closed D) open

Question 2

Why is real GDP a more accurate measure of the level of production in an economy than nominal GDP? Explain with an example.
 
  What will be an ideal response?


millet

  • Sr. Member
  • ****
  • Posts: 354
Reply #1 on: Jun 30, 2018
Answer to Question 1

D

Answer to Question 2

Consider an economy that produces only apples. If the price of apples in 2001 is 1 and the economy produces 10 apples, the nominal GDP of the economy is 10. Now, suppose in 2002, the price of apples doubles without any change in production. In this case, the nominal GDP of the economy in 2002 is 20. However, real GDP in both years is 10 if year 2001 is taken as the base year. So, according to real GDP, output has not changed between the two years. Hence, the real GDP, which accounts for inflation, is a more accurate measure of the level of production than nominal GDP.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

People often find it difficult to accept the idea that bacteria can be beneficial and improve health. Lactic acid bacteria are good, and when eaten, these bacteria improve health and increase longevity. These bacteria included in foods such as yogurt.

Did you know?

People with alcoholism are at a much greater risk of malnutrition than are other people and usually exhibit low levels of most vitamins (especially folic acid). This is because alcohol often takes the place of 50% of their daily intake of calories, with little nutritional value contained in it.

Did you know?

About 80% of major fungal systemic infections are due to Candida albicans. Another form, Candida peritonitis, occurs most often in postoperative patients. A rare disease, Candida meningitis, may follow leukemia, kidney transplant, other immunosuppressed factors, or when suffering from Candida septicemia.

Did you know?

Although the Roman numeral for the number 4 has always been taught to have been "IV," according to historians, the ancient Romans probably used "IIII" most of the time. This is partially backed up by the fact that early grandfather clocks displayed IIII for the number 4 instead of IV. Early clockmakers apparently thought that the IIII balanced out the VIII (used for the number 8) on the clock face and that it just looked better.

Did you know?

Immunoglobulin injections may give short-term protection against, or reduce severity of certain diseases. They help people who have an inherited problem making their own antibodies, or those who are having certain types of cancer treatments.

The pancreas. This organ sits just below the stomach and is both an exocrine and an endocrine gland. The pancreas. This organ sits just below the stomach and is both an exocrine and an endocrine gland.
Photograph of the flea that transmits Yersinia pestis to cause bubonic plague, called the oriental r Photograph of the flea that transmits Yersinia pestis to cause bubonic plague, called the oriental r
The Movius line separates regions of the world where Acheulean hand axes were made from regions wher The Movius line separates regions of the world where Acheulean hand axes were made from regions wher
The world attempted to deal with Somalia as if it were a real country but painfully learned that Som The world attempted to deal with Somalia as if it were a real country but painfully learned that Som
Oil the World’s Most-Used Fuel Oil the World’s Most-Used Fuel
A square matrix P is called a permutation matrix if each row and column of P contains exactly ... A square matrix P is called a permutation matrix if each row and column of P contains exactly ...
Video: Carbohydrate digestion - mouth and stomach & pancreas and small intestine

For a complete list of videos, visit our video library