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Consider a simple economy that produces two goods: beers and enamel pins. The following table shows the prices and quantities of the goods over a three-year period. Beers 2 3 2 Price Quantity Price Quantity Year (Dollars per beer) (Number of beers) (Dollars per enamel pin) (Number of enamel pins) 2019 255 2020 165 2021 130 Enamel pins 2 3 3 195 190 195

Consider a simple economy that produces two goods: beers and enamel pins. The following table shows the prices and quantities of the goods over a three-year period. Beers 2 3 2 Price Quantity Price Quantity Year (Dollars per beer) (Number of beers) (Dollars per enamel pin) (Number of enamel pins) 2019 255 2020 165 2021 130 Enamel pins 2 3 3 195 190 195

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter15: Measuring A Nation's Income
Section: Chapter Questions
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5. Real versus nominal GDP Consider a simple economy that produces two goods: beers and enamel pins. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per beer) 2019 2 2020 3 2021 2 Beers Year 2019 2020 2021 Use the information from the preceding table to fill in the following table. Nominal GDP (Dollars) Quantity (Number of beers) 255 165 130 From 2020 to 2021, nominal GDP The inflation rate in 2021 was Real GDP (Base year 2019, dollars) GDP Deflator Price (Dollars per enamel pin) 2 3 and real GDP Enamel pins 3 Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of enamel pins) 195 190 195 O Real GDP is not influenced by price changes, but nominal GDP is. O Real GDP does not include the value of intermediate goods and services, but nominal GDP does. O Real GDP includes the value of exports, but nominal GDP does not.
Transcribed Image Text:5. Real versus nominal GDP Consider a simple economy that produces two goods: beers and enamel pins. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per beer) 2019 2 2020 3 2021 2 Beers Year 2019 2020 2021 Use the information from the preceding table to fill in the following table. Nominal GDP (Dollars) Quantity (Number of beers) 255 165 130 From 2020 to 2021, nominal GDP The inflation rate in 2021 was Real GDP (Base year 2019, dollars) GDP Deflator Price (Dollars per enamel pin) 2 3 and real GDP Enamel pins 3 Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of enamel pins) 195 190 195 O Real GDP is not influenced by price changes, but nominal GDP is. O Real GDP does not include the value of intermediate goods and services, but nominal GDP does. O Real GDP includes the value of exports, but nominal GDP does not.
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