ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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our standard of living depends solely on goods and services.
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our standard of living only depends on used goods and services.
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our standard of living does not depend only on goods and services.
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we use nominal GDP instead of real GDP.
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Detailed explanation-1: -GDP is important because it gives information about the size of the economy and how an economy is performing. The growth rate of real GDP is often used as an indicator of the general health of the economy. In broad terms, an increase in real GDP is interpreted as a sign that the economy is doing well.
Detailed explanation-2: -Cons. GDP does not capture welfare or human well-being. GDP may not be a strong basis to predict economic growth in times of high uncertainty. As international accounting standards are slow to change and require international consensus, GDP is slow to reflect changes in the world.
Detailed explanation-3: -Many key goods, including peacefulness, environmental protection or family bonding, are not measured in GDP because they do not involve transactions. In fact, GDP includes pollution, crime, the health costs of cigarettes and environmental disasters as ‘growth’ because they generate spending.