Question

38. When calculating real GDP we keep ___ fixed from year to year. When calculating the cost of living (consumer price index) we keep ____ fixed from year to year.

Group of answer choices quantities : quantities prices : prices prices : quantities quantities : prices

2/ Which of the following will increase productivity?

Group of answer choices

an increase in human capital

a decrease in the unemployment rate

an increase in the growth rate of nominal GDP

a decrease in the inflation rate

3.

A country aims to double real GDP per capita in the next 24 years. If the rate of population growth in the country is 1.01% per year then at approximately what rate does real GDP need to grow to achieve this goal?

Answer 1

Answer to the question no. 1:

When calculating real GDP we keep price fixed from year to year. When calculating the cost of living (consumer price index) we keep quantity fixed from year to year.

Explanation: To find the Real GDP, we will keep constant the price level and measure the GDP at different period. It will give difference between the GDP fo two different period. On the other hand, CPI measures the inflation or the increase in the price level. So, to measure this, we will keep the quatity constant and see the price change.

Answer to the question no. 2:

Option a: An increase in human capital.

Explanation: An increase in the human capital means an increase in the skill of the labour force. With the increase in the skill of the labour force, the productivity increases. The productivity means the production per labour units. So, as a result of the highr skill and eduction the productivity or the production per labour unit will increase.

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