Prior to 1996 the government measured real GDP using 1987 prices. ...

[jasdeep_brar]

Prior to 1996 the government measured real GDP using 1987 prices.
 
  What would the rapid growth in computers and the fall in computer prices tend to do to the difference between true GDP growth and measured real GDP growth, relative to using a later year?

Question 2

Joe runs a business and needs to decide how many hours to stay open. Figure 2.2 illustrates his marginal benefit of staying open for each additional hour. Suppose that Joe's marginal cost of staying open per hour is 32.
 
  How many hours should Joe stay open?
  A) 4 hours B) 5 hours C) 6 hours D) 7 hours

[al]

Answer to Question 1

Using 1987 prices would tend to overstate GDP growth relative to using prices from a later year. Computers were a burgeoning part of national product in the late 1980s and early 1990s, and the incremental contribution to GDP looks bigger when using a bigger price rather than a smaller price.

Answer to Question 2

B

[jasdeep_brar]

Correct answers!

[al]

Great! Please up vote