Consider a simple economy that produces two goods: pencils and envelopes. The following table shows the prices and quantities of the goods over athree-year period.PriceYear (Dollars per pencil)201622017420182Year201620172018PencilsUse the information from the preceding table to fill in the following table.From 2017 to 2018, nominal GDPQuantity(Number of pencils)125135125The inflation rate in 2018 wasNominal GDPReal GDP(Dollars) (Base year 2016, dollars) GDP DeflatorPrice(Dollars per envelope)333and real GDPEnvelopesWhy is real GDP a more accurate measure of an economy's production than nominal GDP?Quantity(Number of envelopes)155O Real GDP includes the value of exports, but nominal GDP does not.Real GDP is not influenced by price changes, but nominal GDP is.Real GDP does not include the value of intermediate goods and services, but nominal GDP does.210165

Nominal GDP is the total value of final goods and services produced within the boundaries of a…

Consider a simple economy that produces two goods: pencils and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per pencil) 2016 2 2017 2018 4 Year 2016 2017 2018 2 Pencils From 2017 to 2018, nominal GDP Quantity (Number of pencils) 125 135 Use the information from the preceding table to fill in the following table. The inflation rate in 2018 was 125 Nominal GDP Real GDP (Dollars) (Base year 2016, dollars) GDP Deflator Price (Dollars per envelope) and real GDP Envelopes 3 3 Quantity (Number of envelopes) 155 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. Real GDP does not include the value of intermediate goods and services, but nominal GDP does 210 165