Consider a simple economy that produces two goods: stickers and donuts. The following table shows the prices and quantities of the goods over athree-year period.Year202020212022Year202020212022Price(Dollars per sticker)232StickersFrom 2021 to 2022, nominal GDPUse the information from the preceding table to fill in the following table.Nominal GDPReal GDP(Dollars) (Base year 2020, dollars) GDP DeflatorThe inflation rate in 2022 wasQuantity(Number of stickers)255165130and real GDPDonutsPrice(Dollars per donut)233Why is real GDP a more accurate measure of an economy's production than nominal GDP?Quantity(Number of donuts)195190195Real 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 measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods andservices an economy consumes.

Consider a simple economy that produces two goods: stickers and donuts. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per sticker) 2020 2 2021 3 2022 2 Year 2020 2021 2022 Stickers Use the information from the preceding table to fill in the following table. Nominal GDP (Dollars) From 2021 to 2022, nominal GDP Quantity (Number of stickers) 255 165 130 The inflation rate in 2022 was Real GDP (Base year 2020, dollars) GDP Deflator " Price (Dollars per donut) 2 3 3 and real GDP Donuts Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of donuts) 195 190 195 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 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: stickers and donuts. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per sticker) 2020 2 2021 3 2022 2 Year 2020 2021 2022 Stickers Use the information from the preceding table to fill in the following table. Nominal GDP (Dollars) From 2021 to 2022, nominal GDP Quantity (Number of stickers) 255 165 130 The inflation rate in 2022 was Real GDP (Base year 2020, dollars) GDP Deflator " Price (Dollars per donut) 2 3 3 and real GDP Donuts Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of donuts) 195 190 195 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 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.

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: stickers and donuts. The following table shows the prices and quantities of the goods over a
three-year period.
Year
2020
2021
2022
Year
2020
2021
2022
Price
(Dollars per sticker)
2
3
2
Stickers
From 2021 to 2022, nominal GDP
Use the information from the preceding table to fill in the following table.
Nominal GDP
Real GDP
(Dollars) (Base year 2020, dollars) GDP Deflator
The inflation rate in 2022 was
Quantity
(Number of stickers)
255
165
130
and real GDP
Donuts
Price
(Dollars per donut)
2
3
3
Why is real GDP a more accurate measure of an economy's production than nominal GDP?
Quantity
(Number of donuts)
195
190
195
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 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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Question 1: In an economy, there are only two goods (Cars and cycles) produced. The data for last three years is given in the below table. Calculate the nominal and real GDP of three years and then find the GDP deflator for all the three years. Find year on year (YoY) inflation for 2018 and 2019. Note: the base year for this economy is given as 2017. year Price of Car (AED) Number of Car Price of cycle (AED) Number of cycle 2017 1000 10 200 900 2018 1200 15 210 1000 2019 1500 25 250 1500 Question 2: Explain the role of fiscal and monetary policy in an economy facing a recession. Use appropriate graph to justify your answer
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Price Quantity Year (Dollars per sticker) (Number of stickers) 2020 3 210 2021 2 150 2022 3 125 Year 2020 2021 Use the information from the preceding table to fill in the following table. 2022 Stickers From 2021 to 2022, nominal GDP Nominal GDP Real GDP (Dollars) (Base year 2020, dollars) GDP Deflator The inflation rate in 2022 was Price (Dollars per paper plate) and real GDP 4 4 Paper plates 4 Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of paper plates) 180 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. 200 180
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 2018 2019 2020 Year 2018 2019 2020 Price Quantity (Dollars per beer) (Number of beers) 3 210 150 125 2 3 Beers Use the information from the preceding table to fill in the following table. From 2019 to 2020, nominal GDP The inflation rate in 2020 was Nominal GDP Real GDP (Dollars) (Base year 2018, dollars) GDP Deflator decreased Price (Dollars per seltzer) 4 1 4 4 and real GDP Seltzers Quantity (Number of seltzers) 180 200 180 increased Why is real GDP a more accurate measure or 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. Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.