To study a macroeconomy,we calculate aggregate quantities in real terms because
A) we want to get rid of the illusion of price effects.
B) we want to concentrate on the production of real goods, as opposed to services.
C) it is then easier to take logarithms.
D) it is the only way to reconcile the three approaches to measuring GDP.

Question

Quizplus · Accepted Answer

Calculating aggregate quantities in real terms allows us to remove the effects of inflation and price changes, giving us a more accurate picture of the real growth and performance of the economy. This helps to eliminate any illusions and distortions created by changes in prices over time.

To Study a Macroeconomy,we Calculate Aggregate Quantities in Real Terms