5. Real versus nominal GDPConsider a simple economy that produces two goods: cupcakes and erasers. The following tableshows the prices and quantities of the goods over a three-year period.Year201820192020CupcakesYear201820192020Price(Dollars percupcake)124Quantity(Number ofcupcakes)120130130Price(Dollars pereraser)1Erasers44Use the information from the preceding table to fill in the following table.Nominal GDPReal GDP(Dollars)(Base year 2018, dollars) GDP Deflatorand real GDPQuantity(Number oferasers)195From 2019 to 2020, nominal GDPThe inflation rate in 2020 wasWhy 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, butnominal GDP measures the value of the goods and services an economyconsumes.195145● 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 gross domestic product is a macroeconomic measure of the value of economic output adjusted for…

Year 2018 2019 2020 Year Price (Dollars per cupcake) 1 27 2 Cupcakes 4 Quantity (Number of cupcakes) 120 130 130 Erasers Price (Dollars per eraser) 1 4 4 se the information from the preceding table to fill in the following table. Real GDP Nominal GDP (Rollars) (Base year 2018, dollars) GDP Deflator Quantity (Number of erasers) 195 195 145

Year 2018 2019 2020 Year Price (Dollars per cupcake) 1 27 2 Cupcakes 4 Quantity (Number of cupcakes) 120 130 130 Erasers Price (Dollars per eraser) 1 4 4 se the information from the preceding table to fill in the following table. Real GDP Nominal GDP (Rollars) (Base year 2018, dollars) GDP Deflator Quantity (Number of erasers) 195 195 145

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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