Because GDP Does Not Fully Account for Improvements in the Quality

question 160

Multiple Choice

Because GDP does not fully account for improvements in the quality of goods,

• A) the inflation rate is understated and real GDP is overstated.
• B) the inflation rate is overstated and real GDP is understated.
• C) both the inflation rate and real GDP are overstated.
• D) both the inflation rate and real GDP are understated.

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflecting the goods' sensitivity to price changes.

New York

A state in the northeastern United States, known for its significant cultural, financial, and political influence, as well as being home to New York City, one of the largest and most iconic cities globally.

Florida

A southeastern U.S. state, known for its beaches, theme parks, and warm climate.

Midpoint Formula

A method used in economics to calculate the elasticity of a demand or supply curve, representing the percentage change in quantity demanded or supplied relative to a percentage change in price.