Consider a simple economy that produces two goods: stickers and enamel pins. The following table shows the prices and quantities of the goods a three-year period. Year 2016 2017 2018 Stickers Price Quantity (Dollars per sticker) (Number of stickers) 7 2 245 130 115 Year 2016 2017 2018 2 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Dollars) (Base year 2016, dollars) GDP Deflator From 2017 to 2018, nominal GDP The inflation rate in 2018 was and real GDP Enamel pins Price Quantity (Dollars per enamel pin) (Number of enamel pins) 2 180 2 195 2 155 Why is real GDP a more accurate measure of an economy's production than nominal GDP? 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. 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.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Consider a simple economy that produces two goods: stickers and enamel pins. 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 sticker)
2
4
2
Stickers
Use the information from the preceding table to fill in the following table.
Nominal GDP
(Dollars)
From 2017 to 2018, nominal GDP
Quantity
(Number of stickers)
245
130
115
The inflation rate in 2018 was
Real GDP
(Base year 2016, dollars) GDP Deflator
Price
(Dollars per enamel pin)
, and real GDP
2
Enamel pins
2
2
Quantity
(Number of enamel pins)
180
195
155
Why is real GDP a more accurate measure of an economy's production than nominal GDP?
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.
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.
Transcribed Image Text:Consider a simple economy that produces two goods: stickers and enamel pins. 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 sticker) 2 4 2 Stickers Use the information from the preceding table to fill in the following table. Nominal GDP (Dollars) From 2017 to 2018, nominal GDP Quantity (Number of stickers) 245 130 115 The inflation rate in 2018 was Real GDP (Base year 2016, dollars) GDP Deflator Price (Dollars per enamel pin) , and real GDP 2 Enamel pins 2 2 Quantity (Number of enamel pins) 180 195 155 Why is real GDP a more accurate measure of an economy's production than nominal GDP? 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. 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.
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