Consider a simple economy that produces two goods: plastic cups and paper plates. The following table shows the prices and quantities of the goods over a three-year period. Price Plastic cups Quantity Price Paper plates Quantity (Dollars per plastic cup) (Number of plastic cups) (Dollars per paper plate) (Number of paper plates) Year 2018 2 2019 3 2020 2 255 165 130 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Base year 2018, dollars) GDP Deflator Year (Dollars) 2018 2019 900 1,065 2020 845 From 2019 to 2020, nominal GDP and real GDP ' The inflation rate in 2020 was 2 3 3 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. Real GDP is not influenced by price changes, but nominal GDP is. Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not. 195 190 195

Consider a simple economy that produces two goods: plastic cups and paper plates. The following table shows the prices and quantities of the goods over a three-year period. Price Plastic cups Quantity Price Paper plates Quantity (Dollars per plastic cup) (Number of plastic cups) (Dollars per paper plate) (Number of paper plates) Year 2018 2 2019 3 2020 2 255 165 130 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Base year 2018, dollars) GDP Deflator Year (Dollars) 2018 2019 900 1,065 2020 845 From 2019 to 2020, nominal GDP and real GDP ' The inflation rate in 2020 was 2 3 3 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. Real GDP is not influenced by price changes, but nominal GDP is. Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not. 195 190 195

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Consider a simple economy that produces two goods: plastic cups and paper plates. The following table shows the prices and quantities of the goods
over a three-year period.
Price
Plastic cups
Quantity
Price
Paper plates
Quantity
(Dollars per plastic cup) (Number of plastic cups) (Dollars per paper plate) (Number of paper plates)
Year
2018
2
2019
3
2020
2
255
165
130
Use the information from the preceding table to fill in the following table.
Nominal GDP
Real GDP
(Base year 2018, dollars) GDP Deflator
Year
(Dollars)
2018
900
2019
1,065
2020
845
From 2019 to 2020, nominal GDP
and real GDP
The inflation rate in 2020 was
2
3
3
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.
Real GDP is not influenced by price changes, but nominal GDP is.
◇ Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.
195
190
195

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