2. Real versus nominal GDPConsider a simple economy that produces two goods: plastic cups and seltzers. The following table shows the prices and quantities of the goods over athree-year period.20192020PriceQuantityPriceYear (Dollars per plastic cup) (Number of plastic cups) (Dollars per seltzer)201822Plastic cups4295Seltzers140145Quantity(Number of seltzers)180210160 Module Three QuizPriceQuantityYear (Dollars per plastic cup) (Number of plastic cups)201820192020Year2018201920202Nominal GDP(Dollars)24Plastic cupsUse the information from the preceding table to fill in the following table.From 2019 to 2020, nominal GDPThe inflation rate in 2020 was295140Real GDP(Base year 2018, dollars) GDP DeflatorF145and real GDPPrice(Dollars per seltzer)24SeltzersWhy is real GDP a more accurate measure of an economy's production than nominal GDP?Quantity(Number of seltzers)180210160Real 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.Real GDP is not influenced by price changes, but nominal GDP is.Real GDP includes the value of exports, but nominal GDP does not.

Nominal GDP = Current year quantity * current year pricesReal GDP = Current year quantity * base…

2. Real versus nominal GDP Consider a simple economy that produces two goods: plastic cups and seltzers. The following table shows the prices and quantities of the goods over a three-year period. Plastic cups 2019 2020 Price Quantity Price Year (Dollars per plastic cup) (Number of plastic cups) (Dollars per seltzer) 2018 2 2 4 Seltzers 295 140 145 Quantity (Number of seltzers) 180 210 160

2. Real versus nominal GDP Consider a simple economy that produces two goods: plastic cups and seltzers. The following table shows the prices and quantities of the goods over a three-year period. Plastic cups 2019 2020 Price Quantity Price Year (Dollars per plastic cup) (Number of plastic cups) (Dollars per seltzer) 2018 2 2 4 Seltzers 295 140 145 Quantity (Number of seltzers) 180 210 160

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Measuring A Nation's Income

Section: Chapter Questions

Problem 6PA

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