Consider a simple economy that produces two goods: stickers and enamel pins. The following table shows the prices and quantities of the goods overa three-year period.Year201620172018Year201620172018Price(Dollars per sticker)242StickersUse the information from the preceding table to fill in the following table.Nominal GDP(Dollars)From 2017 to 2018, nominal GDPQuantity(Number of stickers)245130115The inflation rate in 2018 wasReal GDP(Base year 2016, dollars) GDP DeflatorPrice(Dollars per enamel pin), and real GDP2Enamel pins22Quantity(Number of enamel pins)180195155Why 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 andservices 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.

Nominal GDP and real GDP are two indicators used to measure a nation's economic production. Nominal…

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.

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

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 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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Year 2014 (base) 2015 Product Quantity Price Quantity Price 2016 Quantity Price Beer 15 550 575 Pizza 7 275 280 Hot Wings 10 640 660 Given the above table, the nominal GDP in 2015 is: 500 300 600 17 8 12 20 10 13 A/ (whole number) dollars. The real A (whole number) GDP in 2016 is: dollars. The GDP deflator for 2016 equals:
4. GDP vs Real GDP Consider a simple economy that produces two goods: cupcakes and oranges. The following table shows the prices and quantities of the goods over a three-year period. Cupcakes Oranges Price Quantity Price Quantity Year (Dollars per cupcake) (Number of cupcakes) (Dollars per orange) (Number of oranges) 2008 1 120 190 2009 160 4 200 2010 130 4 195 Use the information from the previous table to fill in the following table. GDP Real GDP Year (Dollars) (Base year 2008, dollars) 2008 2009 2010 From 2009 to 2010, GDP and real GDP Why is real GDP a more accurate measure of an economy's production than GDP? Real GDP includes the value of exports, but GDP does not. Real GDP does not include the value of intermediate goods and services, but GDP does. Real GDP is not influenced by price changes, but GDP is. 2. 3.
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Consider a simple economy that produces two goods: apples and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Year Apples Envelopes Price Quantity Price Quantity (Dollars per apple) (Number of apples) (Dollars per envelope) (Number of envelopes) 2016 2 115 5 175 2017 4 150 2 180 2018 1 100 2 160 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: (a. increased, b. decreased), and real GDP (a. increased, b. decreased) . The inflation rate in 2018 was: (a. -47.5%, b. -0.5%, c. 47.5%, d. 52.5%, e. 190.5%) . Why is real GDP a more accurate measure of an economy's production than nominal GDP? a. Real GDP includes the value of exports, but nominal GDP does not.…
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5. Real versus nominal GDP 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. Year 2017 2018 2019 Year 2017 2018 2019 Cupcakes Price (Dollars per cupcake) 1 2 Quantity (Number of cupcakes) 110 140 100 Use the information from the preceding table to fill in the following table Nominal GDP Real GDP (Dollars) (Base year 2017, dollars) Price (Dollars per eraser) 1 Erasers GDP Deflator Quantity (Number of erasers) 180 210 190
You are given the following: Year Quantity of Cars Price of Cars Quantity of Buses Price of Buses 2013 5 million $20,000 1 million $100,000 2014 5.1 million $22,000 1.2 million $102,000 Base Year = 2013 2a. Calculate nominal GDP for 2013. Nominal GDP for 2013 = (5 million × $20,000) + (1 million × $100,000) = $100,000 million + $100,000 million = $200,000 million 2b. Calculate nominal GDP for 2014. Nominal GDP for 2014 = (5.1 million × $22,000) + (1.2 million × $102,000) = $112,200 million + $122,400 million = $234,600 million. 2c. Calculate real GDP for 2014. The real GDP for 2014 will be calculated as:- Real GDP for 2014 = (5.1 million × $20,000) + (1.2 million × $100,000) = $102,000 million + $120,000 million = $222,000 million. 2d. Calculate the GDP Deflator to the nearest tenth for 2014. 2e. What does your previous number mean? 2f. Calculate the CPI to the nearest tenth for 2014. (Use 2013 as the base year.)
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5. Real versus nominal GDP Consider a simple economy that produces two goods: plastic cups and enamel pins. The following table shows the prices and quantities of the goods over a three-year period. Price Quantity Year (Dollars per plastic cup) (Number of plastic cups) 2017 3 280 2018 2 165 2019 3 145 Use the information from the preceding table to fill in the following table. Year 2017 2018 2019 Nominal GDP (Dollars) Plastic cups Real GDP (Base year 2017, dollars) GDP Deflator From 2018 to 2019, nominal GDP The inflation rate in 2019 was I and real GDP Enamel pins Price (Dollars per enamel pin) 4 4 4 Quantity (Number of enamel pins) 165 220 185