. Real versus nominal GDPConsider a simple economy that produces two goods: pens and envelopes. The following table shows the prices and quantities of the goods over a three-year period.YearPensEnvelopesPriceQuantityPriceQuantity(Dollars per pen)(Number of pens)(Dollars per envelope)(Number of envelopes)201511201170201621704230201721104165 Use the information from the preceding table to fill in the following table.YearNominal GDPReal GDPGDP Deflator(Dollars)(Base year 2015, dollars)2015 2016 2017 From 2016 to 2017, nominal GDP , and real GDP . The inflation rate in 2017 was . Why is real GDP a more accurate measure of an economy's production than nominal GDP?Real GDP is not influenced by price changes, but nominal GDP is. Real GDP includes the value of exports, but nominal GDP does not. Real GDP does not include the value of intermediate goods and services, but nominal GDP does.

GDP, gross domestic product is the value of final goods and services produced in the economy within…

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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. Real versus nominal GDP

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

Year	Pens	Envelopes
Price	Quantity	Price	Quantity
(Dollars per pen)	(Number of pens)	(Dollars per envelope)	(Number of envelopes)
2015	1	120	1	170
2016	2	170	4	230
2017	2	110	4	165

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

Year	Nominal GDP	Real GDP	GDP Deflator
(Dollars)	(Base year 2015, dollars)
2015
2016
2017

From 2016 to 2017, nominal GDP , and real GDP .

The inflation rate in 2017 was .

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

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

Real GDP includes the value of exports, but nominal GDP does not.

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

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