Significant Problems with Measuring Real GDP and the Price Level

question 15

Multiple Choice

Significant problems with measuring real GDP and the price level include

• A)changes in standards of living.
• B)changes in relative price levels.
• C)changes in consumption patterns.
• D)changes in the number of consumers.
• E)purchases of used goods.

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Definitions:

Mere Exposure Effect

The phenomenon by which people tend to develop a preference for things merely because they are familiar with them.

Hindsight Bias

The tendency to believe, after an event has occurred, that one would have predicted or expected the outcome, also known as the "knew-it-all-along" effect.

Other-Race Effect

This phenomenon describes the tendency to more easily recognize faces of the race that one is most familiar with, which is often their own race.

Cognitive Dissonance

The mental discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time.