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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. Year 2016 2017 2018 Year 2016 2017 2018 Beers Price (Dollars per beer) 2 2 4 From 2017 to 2018, nominal GDP The inflation rate in 2018 was Quantity (Number of beers) 295 125 120 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Dollars) (Base year 2016, dollars) GDP Deflator Price (Dollars per seltzer) 4 4 and real GDP 4 Seltzers Quantity (Number of seltzers) 195 Why is real GDP a more accurate measure of an economy's production than nominal GDP? 225 180 O Real GDP is not influenced by price changes, but nominal GDP is. O Real GDP does not include the value of intermediate goods and services, but nominal GDP does. 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.

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. Year 2016 2017 2018 Year 2016 2017 2018 Beers Price (Dollars per beer) 2 2 4 From 2017 to 2018, nominal GDP The inflation rate in 2018 was Quantity (Number of beers) 295 125 120 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Dollars) (Base year 2016, dollars) GDP Deflator Price (Dollars per seltzer) 4 4 and real GDP 4 Seltzers Quantity (Number of seltzers) 195 Why is real GDP a more accurate measure of an economy's production than nominal GDP? 225 180 O Real GDP is not influenced by price changes, but nominal GDP is. O Real GDP does not include the value of intermediate goods and services, but nominal GDP does. 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.

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter19: The Macroeconomic Perspective
Section: Chapter Questions
Problem 28P: Last year, a small nation with abundant forests cut down 200 worth of trees. It then turned 100...
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5. Real versus nominal GDP 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. Year 2016 2017 2018 Year 2016 2017 2018 Price (Dollars per beer) 2 2 4 Beers Nominal GDP (Dollars) Quantity (Number of beers) 295 Use the information from the preceding table to fill in the following table. From 2017 to 2018, nominal GDP The inflation rate in 2018 was 125 120 Price (Dollars per seltzer) 4 Real GDP (Base year 2016, dollars) GDP Deflator 4 4 , and real GDP Seltzers Quantity (Number of seltzers) 195 Why is real GDP a more accurate measure of an economy's production than nominal GDP? 225 180 Real GDP is not influenced by price changes, but nominal GDP is. O Real GDP does not include the value of intermediate goods and services, but nominal GDP does. 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:5. Real versus nominal GDP 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. Year 2016 2017 2018 Year 2016 2017 2018 Price (Dollars per beer) 2 2 4 Beers Nominal GDP (Dollars) Quantity (Number of beers) 295 Use the information from the preceding table to fill in the following table. From 2017 to 2018, nominal GDP The inflation rate in 2018 was 125 120 Price (Dollars per seltzer) 4 Real GDP (Base year 2016, dollars) GDP Deflator 4 4 , and real GDP Seltzers Quantity (Number of seltzers) 195 Why is real GDP a more accurate measure of an economy's production than nominal GDP? 225 180 Real GDP is not influenced by price changes, but nominal GDP is. O Real GDP does not include the value of intermediate goods and services, but nominal GDP does. 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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