For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below.

-In the United States,real GDP is currently calculated using
A) a variable-weighting scheme.
B) a chain-weighting scheme.
C) a fixed-weighting scheme.
D) an autoregressive scheme.

Question

For the following questions, suppose an economy produces only food and clothing, and that price and quantity data are given in the table below.

-In the United States,real GDP is currently calculated using
A) a variable-weighting scheme. 
B) a chain-weighting scheme. 
C) a fixed-weighting scheme. 
D) an autoregressive scheme.

Quizplus · Accepted Answer

The table shows different quantities and prices over multiple years, which indicates that the economy is changing over time. Therefore, using a fixed-weighting scheme would not accurately reflect changes in the economy. An autoregressive scheme is a method used in time series analysis and not in calculating GDP. A variable-weighting scheme is also not typically used in calculating GDP. The best method for calculating real GDP in this scenario is a chain-weighting scheme, which adjusts for changes in the composition of the economy.

For the Following Questions, Suppose an Economy Produces Only Food