Consider a simple economy that produces two goods: beers and donuts. The following table shows the prices and quantities of the goods over a three- year period. Year 2020 2021 2022 Price (Dollars per beer) 3 4 Beers 3 Quantity (Number of beers) 260 120 155 Donuts Price (Dollars per donut) 2 2 2 Use the information from the preceding table to fill in the following table. Quantity (Number of donuts) 160 220 140

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Consider a simple economy that produces two goods: beers and donuts. The following table shows the prices and quantities of the goods over a three-
year period.
Year
2020
2021
2022
Year
2020
2021
2022
Price
(Dollars per beer)
3
4
3
Beers
Use the information from the preceding table to fill in the following table.
Nominal GDP
(Dollars)
Quantity
(Number of beers)
260
120
155
From 2021 to 2022, nominal GDP
The inflation rate in 2022 was
Price
(Dollars per donut)
2
Real GDP
(Base year 2020, dollars) GDP Deflator
2
2
, and real GDP
Donuts
Quantity
(Number of donuts)
160
220
140
Why is real GDP a more accurate measure of an economy's production than nominal GDP?
Real GDP includes the value of exports, but nominal GDP does not.
Real GDP is not influenced by price changes, but nominal GDP is.
O Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and
services an economy consumes.
Transcribed Image Text:Consider a simple economy that produces two goods: beers and donuts. The following table shows the prices and quantities of the goods over a three- year period. Year 2020 2021 2022 Year 2020 2021 2022 Price (Dollars per beer) 3 4 3 Beers Use the information from the preceding table to fill in the following table. Nominal GDP (Dollars) Quantity (Number of beers) 260 120 155 From 2021 to 2022, nominal GDP The inflation rate in 2022 was Price (Dollars per donut) 2 Real GDP (Base year 2020, dollars) GDP Deflator 2 2 , and real GDP Donuts Quantity (Number of donuts) 160 220 140 Why is real GDP a more accurate measure of an economy's production than nominal GDP? Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is. O Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services an economy consumes.
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