question archive Real versus nominal GDP Consider a simple economy that produces two goods: cupcakes and erasers
Real versus nominal GDP Consider a simple economy that produces two goods: cupcakes and erasers
Subject:EconomicsPrice: Bought3
Real versus nominal GDP Consider a simple economy that produces two goods: cupcakes and erasers. The following table shows the prices and quantities of the goods over a three-year period. Cupcakes Price Quantity (Dollars per cupcake) (Number of cupcakes) 110 155 120 Erasers Price Quantity (Dollars per eraser) (Number of erasers) 150 Year 2014 2015 215 2016 Use the information from the preceding table to fill in the following table. Nominal GDP (Dollars) Real GDP (Base year 2014, dollars) - Year 2014 GDP Deflator Use the information from the preceding table to fill in the following table. Nominal GDP (Dollars) Real GDP (Base year 2014, dollars) GDP Deflator Year 2014 2015 2016 From 2015 to 2016, nominal GDP , and real GDP The inflation rate in 2016 was . decreased increased Why is real GDP a more accurate measure of an economy's production than nominal GDP? O 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. O Real GDP is not influenced by price changes, but nominal GDP is.
