The base year matters for the computation of real GDP because ...

[BrownTown3]

The base year matters for the computation of real GDP because
 
  A) otherwise we cannot compute growth rates.
  B) relative prices can change over time.
  C) it allows an international comparison of GDP.
  D) it establishes a target for macroeconomic policy.

Question 2

Assume it takes the Fed 4 months to understand that a demand shock has occurred in the economy, and another 1 month to adjust policy to the shock.
 
  The initial 4 month time period refers to the ________, and the following one month time period refers to the ________. A) impact lag; implementation lag
  B) recognition lag; implementation lag
  C) implementation lag; policy lag
  D) policy lag; impact lag

[potomatos]

Answer to Question 1

B

Answer to Question 2

B