Question

Which of the following is correct? a. Nominal GDP is the variable most commonly used to measure short-run economic fluctuations. These fluctuations can be predicted with some accuracy. b. Real GDP is the variable most commonly used to measure short-run economic fluctuations. It is almost impossible to predict these fluctuations with much accuracy. c. Real GDP is the variable most commonly used to measure short-run economic fluctuations. These fluctuations can be predicted with some accuracy. d. Nominal GDP is the variable most commonly used to measure short-run economic fluctuations. It is almost impossible to predict these fluctuations with much accuracy.

Answer 1

Answer:

C. Real GDP is the variable most commonly used to measure short-run economic fluctuations. These fluctuations can be predicted with some accuracy.

Explanation:

GDP is the sum of the values of all goods and services produced by an economy in a given period. The difference between nominal GDP and real GDP consists in the fact that nominal GDP is calculated at current prices, while real GDP is calculated at constant prices, ie it is calculated under a base year chosen to eliminate the effect of inflation. A more consistent assessment considers real GDP. The measurement technique consists of deflating GDP by a price index that allows measuring only changes in quantities and not in market prices. Usually, the techniques for measuring GDP have a good forecast.