Asked by Theresa Quinn on May 17, 2024
Verified
Economists use the price index to eliminate year-to-year changes in GDP due solely to changes in:
A) the exchange rate.
B) the unemployment rate.
C) fiscal spending.
D) consumer demand.
E) the price level.
Price Index
An average that measures the change in prices paid by consumers for goods and services over time, indicating inflation or deflation.
GDP
Gross Domestic Product, a measure of the economic performance of a country, indicating the total value of all goods and services produced over a specific time period.
- Comprehend the relevance and process of calculating price indices and their utility in assessing changes within the economy.
Verified Answer
KR
khayla reeseMay 20, 2024
Final Answer :
E
Explanation :
The price index is used to eliminate changes in GDP due solely to changes in the price level. A change in the exchange rate, unemployment rate, or fiscal spending can all impact GDP, but they are not eliminated through the use of a price index. Consumer demand can also impact GDP, but this is not a factor that a price index is designed to account for.
Learning Objectives
- Comprehend the relevance and process of calculating price indices and their utility in assessing changes within the economy.