Economists Generally Use Real GDP as a Reference Point Because

question 42

Multiple Choice

Economists generally use real GDP as a reference point because it:

• A) captures spending in the underground economy.
• B) is seasonally adjusted for variations in spending habits.
• C) varies less than nominal GDP does.
• D) isolates changes in output.

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, reflecting the potential benefits one misses out on when choosing one option over another.

Bowed Outward

Describes a curve on a graph, typically a production possibility frontier, indicating increasing opportunity costs when shifting resources between two goods.

Opportunity Cost

The cost of choosing one option over another, typically the best alternative forgone as a result of making a decision.

Efficient

Efficiency refers to the optimal production and distribution of resources in a way that best meets the needs and desires of consumers.