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2. Real versus nominal GDP Consider a simple economy that produces two goods: plastic cups and seltzers. The following table shows the prices and quantities of the goods over a three-year period. Year 2019 2020 2021 Year 2019 2020 2021 Use the information from the preceding table to fill in the following table. Price Quantity Price Quantity (Dollars per plastic cup) (Number of plastic cups) (Dollars per seltzer) (Number of seltzers) 2 215 3 155 4 135 210 2 150 190 Nominal GDP (Dollars) Plastic cups Real GDP (Base year 2019, dollars) GDP Deflator From 2020 to 2021, nominal GDP The inflation rate in 2021 was , and real GDP 3 W W Seltzers 3 Why is real GDP a more accurate measure of an economy's production than nominal GDP? 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. Real GDP does not include the value of intermediate goods and services, but nominal GDP does.

2. Real versus nominal GDP Consider a simple economy that produces two goods: plastic cups and seltzers. The following table shows the prices and quantities of the goods over a three-year period. Year 2019 2020 2021 Year 2019 2020 2021 Use the information from the preceding table to fill in the following table. Price Quantity Price Quantity (Dollars per plastic cup) (Number of plastic cups) (Dollars per seltzer) (Number of seltzers) 2 215 3 155 4 135 210 2 150 190 Nominal GDP (Dollars) Plastic cups Real GDP (Base year 2019, dollars) GDP Deflator From 2020 to 2021, nominal GDP The inflation rate in 2021 was , and real GDP 3 W W Seltzers 3 Why is real GDP a more accurate measure of an economy's production than nominal GDP? 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. Real GDP does not include the value of intermediate goods and services, but nominal GDP does.

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter8: Economic Fluctuations, Unemployment, And Inflation
Section: Chapter Questions
Problem 14CQ
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Attempts 2. Real versus nominal GDP Consider a simple economy that produces two goods: plastic cups and seltzers. The following table shows the prices and quantities of the goods over a three-year period. Year 2019 2020 2021 Keep the Highest / 4 Price Quantity Price Quantity Year (Dollars per plastic cup) (Number of plastic cups) (Dollars per seltzer) (Number of seltzers) 2019 2 215 3 155 2020 4 135 210 2021 2 150 190 Use the information from the preceding table to fill in the following table. Nominal GDP (Dollars) Plastic cups From 2020 to 2021, nominal GDP Real GDP (Base year 2019, dollars) GDP Deflator The inflation rate in 2021 was , and real GDP 3 3 Seltzers Why is real GDP a more accurate measure of an economy's production than nominal GDP? 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. Real GDP does not include the value of intermediate goods and services, but nominal GDP does.
Transcribed Image Text:Attempts 2. Real versus nominal GDP Consider a simple economy that produces two goods: plastic cups and seltzers. The following table shows the prices and quantities of the goods over a three-year period. Year 2019 2020 2021 Keep the Highest / 4 Price Quantity Price Quantity Year (Dollars per plastic cup) (Number of plastic cups) (Dollars per seltzer) (Number of seltzers) 2019 2 215 3 155 2020 4 135 210 2021 2 150 190 Use the information from the preceding table to fill in the following table. Nominal GDP (Dollars) Plastic cups From 2020 to 2021, nominal GDP Real GDP (Base year 2019, dollars) GDP Deflator The inflation rate in 2021 was , and real GDP 3 3 Seltzers Why is real GDP a more accurate measure of an economy's production than nominal GDP? 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. Real GDP does not include the value of intermediate goods and services, but nominal GDP does.
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