If GDP in Year 1 Is the Same Dollar Amount

question 12

Multiple Choice

If GDP in year 1 is the same dollar amount as the GDP in year 2,does it follow that Real GDP in year 1 is the same as Real GDP in year 2?

• A) Yes,since prices must necessarily be the same in the two years.
• B) No,since equal GDP figures do not account for population.
• C) No,since prices may not be the same in the two years.
• D) Yes,since equal GDP figures do account for a change in the quality of goods produced in the two years.
• E) none of the above

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Definitions:

Nominal Wage

The wage paid to employees in current dollars without adjustment for inflation, reflecting the actual amount of money received.

General Price Level

An index that shows the average price of goods and services across the economy over a period of time.

Real Wages

Wages adjusted for inflation, reflecting the purchasing power of income earned from work.

Output per Worker

A measure of labor productivity calculated as the total output produced divided by the number of workers.