Measuring expenditures and income with the price level held constant,so that any changes in these values represent changes in the actual amount of goods,services,and income is denoted in ________ terms.

Question

Quizplus · Accepted Answer

Measuring expenditures and income with the price level held constant is known as real terms. Real terms are used to account for the effects of inflation by adjusting for changes in the price level. Nominal terms do not take inflation into account and simply reflect the actual dollar value of income or expenditures. Constant dollar terms are another way of expressing real terms. Therefore, Choice A (nominal) and Choice C (constant dollar) are incorrect.

Measuring Expenditures and Income with the Price Level Held Constant,so