Sia
Question
Statistics
Posted 5 months ago
Which of the following is the best definition of a real variable?
Choose 1 answer:
(A) variables measured in current values
(B) nominal values deflated by the price level
(C) real variables deflated by the price level
(D) nominal variables that are tracked over time
(E) an increase in the price level
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Answer from Sia
Posted 5 months ago
Solution by Steps
step 1
To understand the best definition of a real variable, we need to consider the difference between nominal and real values. Nominal values are measured in current values, while real values are adjusted for inflation
step 2
Real variables are adjusted for changes in the price level to reflect the true purchasing power. This is done by deflating nominal values by the price level
step 3
The best definition of a real variable is one that has been adjusted for changes in the price level, which allows for comparison of economic quantities over time in terms of real purchasing power
Answer
B
Key Concept
Real Variable
Explanation
A real variable is a variable that has been adjusted for changes in the price level, reflecting the true value of economic quantities over time.
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