Why Is Real GDP Not a Good Measure of Average

question 104

Multiple Choice

Why is real GDP not a good measure of average material living standards?

• A)Because it is biased by the changes in the inflation rate.
• B)Because it excludes the role of imported goods.
• C)Because it does not take into account the size of the population.
• D)Because it is sensitive to the base year chosen in its calculation.
• E)Because the price level may be changing,which affects what people can afford to buy.

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Definitions:

Accrued Expenses

Accrued expenses are liabilities recognized on the books before they have been billed or paid.

Adjusting Entries

Entries made at the end of an accounting period to update the accounts for items that are not recorded during the regular accounting period.

Accrued Revenues

Revenue that has been earned but not yet received in cash or recorded, representing assets on the balance sheet.

Balance Sheet Accounts

Accounts that are reported on the balance sheet and reflect the company's assets, liabilities, and equity at a point in time.