From 2017 to 2018, nominal GDP The inflation rate in 2018 was and real GDP Why is real GDP a more accurate measure of an economy's production than nominal GDP? Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is. O Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.
From 2017 to 2018, nominal GDP The inflation rate in 2018 was and real GDP Why is real GDP a more accurate measure of an economy's production than nominal GDP? Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is. O Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Measuring A Nation's Income
Section: Chapter Questions
Problem 7QR
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Question
Consider a simple economy that produces two goods: apples and envelopes. The following table shows the prices and quantities of the goods over a three-year period.
Year
|
Apples
|
Envelopes
|
||
---|---|---|---|---|
Price
|
Quantity
|
Price
|
Quantity
|
|
(Dollars per apple)
|
(Number of apples)
|
(Dollars per envelope)
|
(Number of envelopes)
|
|
2016 | 2 | 115 | 5 | 175 |
2017 | 4 | 150 | 2 | 180 |
2018 | 1 | 100 | 2 | 160 |
Use the information from the preceding table to fill in the following table.
Year
|
Nominal
|
Real GDP (Base year 2016, dollars)
|
GDP Deflator
|
---|---|---|---|
2016 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
From 2017 to 2018, nominal GDP: (a. increased, b. decreased), and real GDP (a. increased, b. decreased) .
The inflation rate in 2018 was: (a. -47.5%, b. -0.5%, c. 47.5%, d. 52.5%, e. 190.5%) .
Why is real GDP a more accurate measure of an economy's production than nominal GDP?
a. Real GDP includes the value of exports, but nominal GDP does not.
b. Real GDP is not influenced by price changes, but nominal GDP is.
c. Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.
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