Consider a simple economy that produces two goods: beers and seltzers. The following table shows the prices and quantities of the goods or three-year period. Year 2020 2021 2022 Year 2020 2021 2022 Beers Price (Dollars per beer) 2 3 2 Use the information from the preceding table to fill in the following table. Quantity (Number of beers) 255 165 130 From 2021 to 2022, nominal GDP The inflation rate in 2022 was Price (Dollars per seltzer) 2 Nominal GDP Real GDP (Dollars) (Base year 2020, dollars) GDP Deflator 3 3 , and real GDP Seltzers Quantity (Number of seltzers) 195 190 195
Consider a simple economy that produces two goods: beers and seltzers. The following table shows the prices and quantities of the goods or three-year period. Year 2020 2021 2022 Year 2020 2021 2022 Beers Price (Dollars per beer) 2 3 2 Use the information from the preceding table to fill in the following table. Quantity (Number of beers) 255 165 130 From 2021 to 2022, nominal GDP The inflation rate in 2022 was Price (Dollars per seltzer) 2 Nominal GDP Real GDP (Dollars) (Base year 2020, dollars) GDP Deflator 3 3 , and real GDP Seltzers Quantity (Number of seltzers) 195 190 195
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Consider a simple economy that produces two goods: beers and seltzers. The following table shows the prices and quantities of the goods over a
three-year period.
Price
Year (Dollars per beer)
2020
2
2021
3
2
2022
Year
2020
Beers
2021
2022
Quantity
(Number of beers)
255
From 2021 to 2022, nominal GDP
The inflation rate in 2022 was
165
Use the information from the preceding table to fill in the following table.
130
Price
(Dollars per seltzer)
2
3
Nominal GDP
Real GDP
(Dollars) (Base year 2020, dollars) GDP Deflator
3
and real GDP
Seltzers
Quantity
(Number of seltzers)
195
190
Why is real GDP a more accurate measure of an economy's production than nominal GDP?
195
O Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.
O Real GDP is not influenced by price changes, but nominal GDP is.
O Real GDP includes the value of exports, but nominal GDP does not.
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