Multiple Choice
Which factor creates a problem when using money to value GDP, making it difficult to compare economic output across different years?
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10. Measuring National Output and Income
Nominal GDP and Real GDP
Multiple Choice
Which of the following is NOT adequately measured by real GDP per capita?
A
Changes in the price level over time
B
Income distribution within a country
C
Average economic output per person
D
Total production adjusted for inflation
Verified step by step guidance1
Step 1: Understand what real GDP per capita measures. Real GDP per capita is the total economic output of a country adjusted for inflation, divided by the population. It reflects the average economic output per person and accounts for changes in the price level over time.
Step 2: Recognize that real GDP per capita adjusts for inflation by using constant prices, so it removes the effect of changes in the price level over time, allowing comparison of economic output across different years.
Step 3: Note that real GDP per capita provides an average measure of economic production per person, but it does not provide information about how income is distributed among individuals or groups within the country.
Step 4: Identify that income distribution refers to how evenly or unevenly income is spread across the population, which is a separate concept from average output and is not captured by real GDP per capita.
Step 5: Conclude that among the options, 'Income distribution within a country' is NOT adequately measured by real GDP per capita, while the other options relate directly to what real GDP per capita represents.
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