Homework - ECON 205 Principles of Macroeconomics Fall 2007...

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ECON 205 Principles of Macroeconomics, Fall 2007 Prof. Al-Sabea Homework #1 ( Due 11/06-11/09 in discussion sessions) Name: Camille Pages Discussion session : Thurs. 6PM Student ID: 9578283876 [Question 1~3: True or false? Explain! ] 1. It is impossible for real GDP increase to be coupled by a decrease of nominal GDP. False. This can occur is the real current dollars, in reference to the purchasing power, increases. Because this increase in purchasing power is not translated in the nominal GDP 2. If Country A has a higher real per capita GDP than Country B, then Country A is certainly better off than Country B. False. While GDP is a good indicator for changes within a country’s economic activity, it does not account for numerous things. Quality of life, environment and illegal activities are not represented or measured by GDP, which have a lot to do with how “well off” a nation is. Therefore, GDP alone cannot be used to compare nations. 3. In the short run, shifts in aggregate demand cause fluctuations in the economy's
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