Worked example
Use real value = nominal value ÷ price index × 100. Nominal output is 240 and the index is 120. What is the adjusted value?
Answer & why
Answer: 200
240 ÷ 120 × 100 = 200 in the stated base-price units.
Grade 12 · Social studies
Compare economic indicators with context
Use supplied price-index, per-person and distribution data without treating one aggregate as a complete account of wellbeing.
6 authored questions + worked example
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All questions
All 6 authored questions for this skill.
Question 1
Output rises 10% and population also rises 10%. Under these exact changes, what happens to output per resident?
- It stays unchanged.
- It rises 20%.
- It falls to zero.
- It necessarily doubles.
A hint
Check the denominator, price basis and distribution before interpreting a change in a headline total.
Answer & why
Answer: It stays unchanged.
Both numerator and denominator multiply by 1.10, leaving their ratio unchanged.
Question 2
Two groups each have mean income 20 units. Does the shared mean prove their incomes are distributed identically?
- No; different distributions can share the same mean.
- Yes; means list every person's income.
- No; a mean cannot use income data.
- Yes; every individual must earn 20.
A hint
Check the denominator, price basis and distribution before interpreting a change in a headline total.
Answer & why
Answer: No; different distributions can share the same mean.
An average does not specify each person's value or the spread.
Question 3
Nominal pay rises 5%, while the supplied price index also rises exactly 5%. What happens to purchasing power under this simple index model?
- It rises 10%.
- It stays unchanged.
- It doubles.
- It falls by half.
A hint
Check the denominator, price basis and distribution before interpreting a change in a headline total.
Answer & why
Answer: It stays unchanged.
Pay and the price level change by the same factor, so their ratio is unchanged.
Question 4
A report gives output per resident but no health, leisure or environmental measures. What claim exceeds this indicator alone?
- It does not show every individual's output.
- It completely measures every aspect of wellbeing.
- It is an output-to-population ratio.
- Other indicators can add context.
A hint
Check the denominator, price basis and distribution before interpreting a change in a headline total.
Answer & why
Answer: It completely measures every aspect of wellbeing.
A single production average cannot represent every dimension of wellbeing.
Question 5
Use real value = nominal value ÷ price index × 100. Nominal output is 240 and the index is 120. What is the adjusted value?
- 200
- 120
- 360
- 288
A hint
Check the denominator, price basis and distribution before interpreting a change in a headline total.
Answer & why
Answer: 200
240 ÷ 120 × 100 = 200 in the stated base-price units.
Question 6
An invented economy has total output 1,000 units and 100 residents. What is output per resident?
- 100,000 units
- 1,100 units
- 100 units
- 10 units
A hint
Check the denominator, price basis and distribution before interpreting a change in a headline total.
Answer & why
Answer: 10 units
1,000 ÷ 100 = 10 units per resident.