Which of the Following Relationships Do Forecasters Use to Make

question 71

Multiple Choice

Which of the following relationships do forecasters use to make their one-year-ahead predictions for real GDP?

• A)Real GDP is the sum of consumption, investment, government purchases, and net exports.
• B)Real GDP is determined by the amount of capital, labor, and technology employed in the economy.
• C)Real GDP is determined by the capital and labor employed in the economy.
• D)Real GDP in any year should equal real GDP in the previous year.
• E)Real GDP equals nominal GDP during the base year.

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Definitions:

Ability-To-Pay Principle

A tax theory stating that taxes should be levied according to an individual or entity’s capacity to pay.

Benefits Principle

A theory in taxation stating that those who benefit from government services should pay taxes in proportion to the amount they benefit.

Government Services

Public programs and activities provided by the federal, state, and local governments to benefit their citizens.

Ability-To-Pay Principle

A taxation principle that suggests taxes should be levied according to an individual's or entity's capacity to pay, typically measured by income or wealth.