Nominal vs Real GDP Formula Quiz

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What is the difference between nominal GDP and real GDP?

Nominal GDP values goods at current market prices, while real GDP values goods at constant prices.

In the Real-to-Nominal formula, what does the nominal value of an economic variable depend on?

The price level and the real value of the variable.

If the price of apples increases from $0.50 to $0.55 per pound and the quantity produced of apples increases, what will happen to the real output of apples?

Real output will increase.

In Year 2, if the price of xylophones increases from $10 to $12 and the quantity produced also increases, what impact will this have on the nominal GDP compared to the previous year?

Nominal GDP will increase.

How is nominal output different from real output?

Nominal output considers only the quantity produced, while real output considers both quantity and market value.

What economic concept is used to calculate the growth rate of a variable over time?

Percentage change

Which economic statistic is measured using actual market prices and is not adjusted for inflation?

Nominal Value

What is the process called by which capital ages and loses value?

Depreciation

Which of the following represents all income to businesses and individuals?

National Income

If an economic statistic is measured after being adjusted for inflation, it is known as?

Real Value

Which value is calculated by taking Gross National Product (GNP) and subtracting the value of depreciation?

Net National Product

If unwary analysts compared nominal GDP in different years without considering inflation, what might happen according to the text?

They would underestimate national output growth.

What is needed to measure changes in output by extracting the increase in prices from nominal GDP?

GDP Deflator

When converting nominal figures to real figures, what should be done to the published price index?

Divide by 100

How is the nominal value of output calculated?

Price multiplied by Quantity of Output

What is a two-digit decimal number used as a price index?

0.85

In a business cycle, what is the lowest point of output before a recovery begins known as?

Trough

Which term refers to the relatively short-term movement of the economy from recession to expansion?

Business Cycle

Test your knowledge on nominal and real GDP concepts with this quiz that covers the Real-to-Nominal formula, growth rate calculations, and the relationship between price level and economic variables.

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