Consider a simple economy that produces two goods: cupcakes and erasers. The following table shows the prices and quantities of the goods over a three-year period. Cupcakes erasers pricequantitypricequantityyear(dollars per cupcakes)(number of cupcakes)(dollars per erasers)(numberof eraser)201621253155201741353210201821253165 Use the information from the preceding table to fill in the following table.YearNominal GDP (dollars)Real GDP (base year 2016, dollars)GDP Deflator 2016 2017 2018 From 2017 to 2018, nominal GDP_______ (decreases/increased) , and real GDP_______(decreased/increased) . The inflation rate in 2018 was___________(-23.1% / -0.2% / 23.1% / 76.9% / 130%) Why is real GDP a more accurate measure of an economy's production than nominal GDP? Real GDP does not include the value of intermediate goods and services, but nominal GDP does. Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not. Real GDP is not influenced by price changes, but nominal GDP is. THANK YOU FOR THE HELP!

Nominal GDP measures a country's production of final goods and services at current market prices,…

Answered: Consider a simple economy that produces…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a simple economy that produces two goods: cupcakes and erasers. The following table shows the prices and quantities of the goods over a three-year period.

	Cupcakes		erasers

	price	quantity	price	quantity
year	(dollars per cupcakes)	(number of cupcakes)	(dollars per erasers)	(number of eraser)
2016	2	125	3	155
2017	4	135	3	210
2018	2	125	3	165

Use the information from the preceding table to fill in the following table.

Year	Nominal GDP (dollars)	Real GDP (base year 2016, dollars)	GDP Deflator

2016
2017
2018

From 2017 to 2018, nominal GDP_______ (decreases/increased) , and real GDP_______(decreased/increased) .

The inflation rate in 2018 was___________(-23.1% / -0.2% / 23.1% / 76.9% / 130%)

Why is real GDP a more accurate measure of an economy's production than nominal GDP?

Real GDP does not include the value of intermediate goods and services, but nominal GDP does.

Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.

Real GDP is not influenced by price changes, but nominal GDP is.

THANK YOU FOR THE HELP!

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