If You Attempted to Determine If the Standard of Living

question 117

Multiple Choice

If you attempted to determine if the standard of living of a country has increased by looking only at changes in its nominal gross domestic product (GDP) ,what would you be missing?

• A) The fact that nominal GDP includes all economic activity, including sales of used goods and illegal goods
• B) The fact that nominal GDP only considers changes in the price level but ignores changes in population
• C) The fact that an increase in nominal GDP normally means that standards of living are falling, not rising
• D) The fact that, in the long run, nominal GDP is the best measure of overall economic growth
• E) The fact that an increase in nominal GDP does not necessarily mean that standards of living are rising, due to changes in prices and the population

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Definitions:

Combining Firms

The process of merging two or more companies into one entity, typically to achieve synergies or strategic objectives.

Acquiring Firm

A company that purchases a majority interest in another company to take control of it.

Parent

A company that holds a controlling interest in one or more subsidiaries, or an individual who has a child.

Subsidiary

A company that is controlled by another company, known as the parent company, through majority share ownership.