Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP Year (Dollars) (Base year 2018, dollars) GDP Deflator 2018 2019 2020 From 2019 to 2020, nominal GDP , and real GDP The inflation rate in 2020 was Why is real GDP a more accurate measure of an economy's production than nominal GDP? Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not. Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is.
Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP Year (Dollars) (Base year 2018, dollars) GDP Deflator 2018 2019 2020 From 2019 to 2020, nominal GDP , and real GDP The inflation rate in 2020 was Why is real GDP a more accurate measure of an economy's production than nominal GDP? Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not. Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:2. Real versus nominal GDP
Consider a simple economy that produces two goods: pens and erasers. The following table shows the prices and quantities of the goods over a three-
year period.
Pens
Erasers
Price
Quantity
Price
Quantity
Year
(Dollars per pen)
(Number of pens)
(Dollars per eraser)
(Number of erasers)
2018
1
145
2
195
2019
165
4
225
2020
3
110
4
165
Use the information from the preceding table to fill in the following table.
Nominal GDP
Real GDP
Year
(Dollars)
(Base year 2018, dollars)
GDP Deflator
2018
2019
2020
From 2019 to 2020, nominal GDP
and real GDP
The inflation rate in 2020 was
Why is real GDP a more accurate measure of an economy's production than nominal GDP?
O Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.
O Real GDP includes the value of exports, but nominal GDP does not.
O Real GDP is not influenced by price changes, but nominal GDP is.
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