Chapter 6: Q. 16 (page 160)
How do you convert a series of nominal economic
data over time to real terms?
We utilize inflation-adjusted data to turn nominal economic data from numerous years into real data.
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According to Table 6.7, how long has the average expansion lasted since the end of World War II?
Would you usually expect GDP as measured by
what is demanded to be greater than GDP measured by
what is supplied, or the reverse?
Explain briefly whether each of the following would cause GDP to overstate or understate the degree of change
in the broad standard of living.
a. The environment becomes dirtier
b. The crime rate declines
c. A greater variety of goods become available to consumers
d. Infant mortality declines
List some of the reasons why economists should
not consider GDP an effective measure of the standard of living in a country.
Cross-country comparisons of GDP per capita
typically use purchasing power parity equivalent
exchange rates, which are a measure of the long-run equilibrium value of an exchange rate. In fact, we used PPP equivalent exchange rates in this module. Why could use market exchange rates, which sometimes change dramatically in a short period of time, be misleading?
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