For the following question(s), suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below.

-It is difficult to accurately measure real GDP because
A) it does not include taxes.
B) it does not include money transfers.
C) it does not accurately take into account the introduction of new goods.
D) it cannot take into account changes in government policy over time.
E) it does not take into account intermediate goods.

Question

For the following question(s), suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below.
 
-It is difficult to accurately measure real GDP because
A) it does not include taxes. 
B) it does not include money transfers. 
C) it does not accurately take into account the introduction of new goods. 
D) it cannot take into account changes in government policy over time. 
E) it does not take into account intermediate goods.

Quizplus · Accepted Answer

Real GDP is difficult to accurately measure because it does not accurately take into account the introduction of new goods, which can lead to an over or underestimate of the actual value of production. This is known as the "new goods bias."

For the Following Question(s), Suppose That an Economy Produces Only