Consider a simple economy that produces two goods: plastic cups and paper plates. The following table shows the prices and quantities of the goods over a three-year period. Price Plastic cups Quantity Price Paper plates Quantity (Dollars per plastic cup) (Number of plastic cups) (Dollars per paper plate) (Number of paper plates) Year 2018 2 2019 3 2020 2 255 165 130 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Base year 2018, dollars) GDP Deflator Year (Dollars) 2018 2019 900 1,065 2020 845 From 2019 to 2020, nominal GDP and real GDP ' The inflation rate in 2020 was 2 3 3 Why is real GDP a more accurate measure of an economy's production than nominal GDP? Real GDP does not include the value of intermediate goods and services, but nominal GDP does. Real GDP is not influenced by price changes, but nominal GDP is. Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not. 195 190 195
Consider a simple economy that produces two goods: plastic cups and paper plates. The following table shows the prices and quantities of the goods over a three-year period. Price Plastic cups Quantity Price Paper plates Quantity (Dollars per plastic cup) (Number of plastic cups) (Dollars per paper plate) (Number of paper plates) Year 2018 2 2019 3 2020 2 255 165 130 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Base year 2018, dollars) GDP Deflator Year (Dollars) 2018 2019 900 1,065 2020 845 From 2019 to 2020, nominal GDP and real GDP ' The inflation rate in 2020 was 2 3 3 Why is real GDP a more accurate measure of an economy's production than nominal GDP? Real GDP does not include the value of intermediate goods and services, but nominal GDP does. Real GDP is not influenced by price changes, but nominal GDP is. Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not. 195 190 195
Chapter15: Gross Domestic Product
Section: Chapter Questions
Problem 12SQP
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