In the Generation of GDP, Pollution Often Occurs

question 64

Multiple Choice

In the generation of GDP, pollution often occurs.As a result,

• A)the value of nominal GDP will always be greater than the value of real GDP.
• B)the value of real GDP will always be greater than the value of nominal GDP.
• C)GDP is not always a good measure of economic or social welfare.
• D)the value of GDP is underestimated.

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Definitions:

Consumer Price Index

The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a basket of consumer goods and services.

Inflation Rate

The pace at which the overall price level for goods and services increases, diminishing the buying power.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to estimate inflation.

Base-Year Prices

Prices from a specific base year used to express the real value of goods and services in order to remove the effects of inflation over time.