The Best Price Index to Use in Calculating Real GDP

question 146

Multiple Choice

The best price index to use in calculating real GDP is

• A)Any of the indexes because they all reflect price level changes.
• B)The CPI.
• C)The PPI.
• D)The GDP deflator.

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Definitions:

Wage Rate

The fixed regular payment, typically paid on a daily or weekly basis, made by an employer to an employee.

Union Labor

Labor unions are organized groups of workers who unite to make decisions about the conditions of their work.

Elastic Demand

Describes a situation where the quantity demanded of a product changes significantly in response to changes in its price.

Strong Union

Represents a labor union with significant bargaining power, often due to a large membership or strategic importance, capable of negotiating favorable terms for its members.