Economists prefer using real GDP because, other things held constant, increases in _____ represent true increases in the standard of living.
A) production
B) prices
C) inflation
D) consumer spending

Question

Quizplus · Accepted Answer

Real GDP measures the value of goods and services produced in an economy adjusted for inflation. By using real GDP, economists can accurately measure the increase in the quantity of goods and services produced, which can lead to an improvement in the standard of living. Increases in prices (B) don't necessarily represent an increase in the quantity of goods and services produced, and inflation (C) is an important factor to consider in measuring economic activity, but doesn't directly measure the standard of living. Consumer spending (D) is a component of GDP, but only represents one aspect of economic activity and doesn't fully capture changes in the standard of living.

Economists Prefer Using Real GDP Because, Other Things Held Constant