Use the information from the preceding table to fill in the following table.Nominal GDPReal GDPYear(Dollars)(Base year 2016, dollars)GDP Deflator201620172018From 2017 to 2018, nominal GDPand real GDPThe inflation rate in 2018 wasWhy is real GDP a more accurate measure of an economy's production than nominal GDP?O Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.O Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods andservices an economy consumes.O Real GDP is not influenced by price changes, but nominal GDP is. 2. Real versus nominal GDPConsider a simple economy that produces two goods: pencils and envelopes. The following table shows the prices and quantities of the goods over athree-year period.PencilsEnvelopesPriceQuantityPriceQuantityYear(Dollars per pencil)(Number of pencils)(Dollars per envelope)(Number of envelopes)201611252002017170423020181504170

2. Real versus nominal GDP Consider a simple economy that produces two goods: pencils and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Pencils Envelopes Price Quantity Price Quantity Year (Dollars per pencil) (Number of pencils) (Dollars per envelope) (Number of envelopes) 2016 1 125 200 2017 170 4 230 2018 150 4 170

2. Real versus nominal GDP Consider a simple economy that produces two goods: pencils and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Pencils Envelopes Price Quantity Price Quantity Year (Dollars per pencil) (Number of pencils) (Dollars per envelope) (Number of envelopes) 2016 1 125 200 2017 170 4 230 2018 150 4 170

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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