In computing GDP,market prices are used in the calculations because
A)market prices are constant over time.
B)market prices do not reflect how prices change over time.
C)market prices are consistently free of inflation.
D)market prices can be used to combine the variety of goods and services produced in an economy into a single measure.

Question

In computing GDP,market prices are used in the calculations because
A)​market prices are constant over time.
B)​market prices do not reflect how prices change over time.
C)​market prices are consistently free of inflation.
D)​market prices can be used to combine the variety of goods and services produced in an economy into a single measure.

Quizplus · Accepted Answer

Market prices can be used to combine the variety of goods and services produced in an economy into a single measure. This is because the market prices reflect the relative value of each good and service, and by using these prices, we can compare the output of different industries and sectors of the economy. However, it is important to adjust for inflation in order to compare GDP across different time periods.

In Computing GDP,market Prices Are Used in the Calculations Because