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Consider a simple economy that produces two goods: stickers and seltzers. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per sticker) 2020 2 2021 2 2022 Stickers Year 2020 2021 2022 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Dollars) (Base year 2020, dollars) GDP Deflator From 2021 to 2022, nominal GDP The inflation rate in 2022 was Quantity (Number of stickers) 295 140 145 and real GDP Price (Dollars per seltzer) 2 Seltzers 4 4 Why is real GDP a more accurate measure of an economy's production than nominal GDP?- Quantity (Number of seltzers) 180 210 160

Consider a simple economy that produces two goods: stickers and seltzers. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per sticker) 2020 2 2021 2 2022 Stickers Year 2020 2021 2022 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Dollars) (Base year 2020, dollars) GDP Deflator From 2021 to 2022, nominal GDP The inflation rate in 2022 was Quantity (Number of stickers) 295 140 145 and real GDP Price (Dollars per seltzer) 2 Seltzers 4 4 Why is real GDP a more accurate measure of an economy's production than nominal GDP?- Quantity (Number of seltzers) 180 210 160

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5. Real versus nominal GDP Consider a simple economy that produces two goods: stickers and seltzers. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per sticker) 2020 2 2021 2 2022 Stickers Year 2020 2021 2022 From 2021 to 2022, nominal GDP The inflation rate in 2022 was Quantity (Number of stickers) 295 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Dollars) (Base year 2020, dollars) GDP Deflator 140 145 and real GDP Seltzers Price (Dollars per seltzer) 2 4 4 Why is real GDP a more accurate measure of an economy's production than nominal GDP?- Quantity (Number of seltzers) 180 210 160
Transcribed Image Text:5. Real versus nominal GDP Consider a simple economy that produces two goods: stickers and seltzers. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per sticker) 2020 2 2021 2 2022 Stickers Year 2020 2021 2022 From 2021 to 2022, nominal GDP The inflation rate in 2022 was Quantity (Number of stickers) 295 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Dollars) (Base year 2020, dollars) GDP Deflator 140 145 and real GDP Seltzers Price (Dollars per seltzer) 2 4 4 Why is real GDP a more accurate measure of an economy's production than nominal GDP?- Quantity (Number of seltzers) 180 210 160
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 does not include the value of intermediate goods and services, but nominal GDP does. 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.
Transcribed Image Text: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 does not include the value of intermediate goods and services, but nominal GDP does. 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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