Question

ut References Mailings Review View Help Question 4 1 pts Which statement about real and nominal GDP is correct? Real GDP is calculated using current period prices. O Real GDP is calculated using constant, base period prices. In an AS-AD graph, nominal GDP is on the horizontal axis. Nominal GDP is always a smaller number than real GDP. Question 5 1 pts US GDP would exclude which of the following? a new bridge built by the state of Washington lawyer services purchased by a home buyer O the increase in the price of a house built in 2010 that was re-sold this year O lawn care services purchased by a home owner foc

Answer 1

4. Looking each option one by one :

Option a Real GDP is calculated using current period price is wrong as Nominal GDP is calculated using current period price by taking inflation into account.

Option b Real GDP is calculated using constant, base period prices is correct  as Real GDP tis calculated from taking the price of base year without considering inflation into account.

Option c In an AS-AD graph nominal GDP is on the horizontal axis is wrong as in AS-AD graph is drawn using the Real GDP

Option d Nominal GDP is always a smaller number than Real GDP is wrong as the Nominal GDP depends upon current year prices it can be less than or more than Real GDP. If current year prices are less than base year prices of real GDP then Nominal GDP will be less than Real GDP but when current prices are higher than Base year prices then Nominal GDP will be more than Real GDP

So, Option b. is correct

5. In calculation of GDP we take into account monetary value of all new finished goods and services that the country produces in the given financial year within its territory. So any resale of good which was produced in earlier years will not be taken in calculation of GDP.

So, Let's see each option :

Option a A new bridge built by state of Washington is a new bridge hence it will add it's value to the GDP. ​​​So it's included in the GDP

Option b Lawyer service purchased by a home buyer is a service taken in the current year. So it's included in the GDP

Option c The increase in the price of a house built in 2010 that was resold this year is a resale of good produced in earlier year. So it's excluded in the GDP

Option d Lawn care service purchased by a home buyer is a service taken in the current year. So it's included in the GDP

So, Only Option c is excluded from US GDP

Hence, Option c is correct