This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Japan experienced periods of deflation a declining price level during the 1990s. During a ... (Read 63 times)

tth

  • Hero Member
  • *****
  • Posts: 579
on: Jun 29, 2018
Japan experienced periods of deflation  a declining price level  during the 1990s. During a deflationary period, which would be higher: nominal GDP or real GDP? Why? Assume that the base year of choice is prior to the deflationary period.
 
  What will be an ideal response?

Question 2

Explain the output effectof a factor price increase.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

GCabra

  • Sr. Member
  • ****
  • Posts: 331
Reply #1 on: Jun 29, 2018
Answer to Question 1

Real GDP would be higher, as long as the base year was before the period of deflation. Nominal GDP would be measured using the lower prices that resulted from the deflation. Real GDP would use the higher prices before the deflation, assuming the base year was before the deflation.

Answer to Question 2

An increase in the price of a factor leads to an increase in the cost of production. When a firm faces higher costs, it is likely to produce less in the short run. When the firm cuts its output, it lowers its demand for all factors of production.


tth

  • Member
  • Posts: 579
Reply 2 on: Jun 29, 2018
Excellent

amcvicar

  • Member
  • Posts: 341
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

Though newer “smart” infusion pumps are increasingly becoming more sophisticated, they cannot prevent all programming and administration errors. Health care professionals that use smart infusion pumps must still practice the rights of medication administration and have other professionals double-check all high-risk infusions.

Did you know?

If you use artificial sweeteners, such as cyclamates, your eyes may be more sensitive to light. Other factors that will make your eyes more sensitive to light include use of antibiotics, oral contraceptives, hypertension medications, diuretics, and antidiabetic medications.

Did you know?

More than 30% of American adults, and about 12% of children utilize health care approaches that were developed outside of conventional medicine.

Did you know?

Drugs are in development that may cure asthma and hay fever once and for all. They target leukotrienes, which are known to cause tightening of the air passages in the lungs and increase mucus productions in nasal passages.

Did you know?

Only one in 10 cancer deaths is caused by the primary tumor. The vast majority of cancer mortality is caused by cells breaking away from the main tumor and metastasizing to other parts of the body, such as the brain, bones, or liver.

Nuclear division at the DNA level Nuclear division at the DNA level
Effect of Perceived Price of a Drug on Placebo Analgesia Effect of Perceived Price of a Drug on Placebo Analgesia
Shifts between Warm and Cold Periods during the Last 3 Million Years Shifts between Warm and Cold Periods during the Last 3 Million Years
Critical Periods of Development Critical Periods of Development
U.S. Subsurface Coal Mining: Output, Price, and Output per Worker-Hour, 1949–1994 U.S. Subsurface Coal Mining: Output, Price, and Output per Worker-Hour, 1949–1994
"The Department of Agriculture came out today with its prediction for food price "The Department of Agriculture came out today with its prediction for food price
Video: Coronary Heart Disease Animation

For a complete list of videos, visit our video library