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Real and nominal measures
Output, Expenditure and Income can be valued at current market price in which case we speak, for example, of money or Nominal NNP, or NNP valued at current prices. Changes from one year to another are then a compound of changes in physical quantities and prices. Output, Expenditure and Income can also be valued at the prices ruling in some base year. In this case, each year's quantity is priced at its base-year prices and then summed. We then speak, for example, of GDP at constant prices, or REAL GDP. Changes in constant-price GDP give a measure of real or quantity changes in total output.
The elasticity of a demand curve is frequently judged by its appearance: the flatter the demand curve, the greater the elasticity and vice versa. However this conclusion is mislead
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Using the discounting principle calculate the present value of an annuity of five years at Rs. 500 payments made at the end of each of the next five years at 10% interest. stion..
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