Consider a simple economy that produces two goods: cupcakes and muffins. The following table shows the prices and quantities of the goods over a three-year period. Quantity Year (Dollars per cupcake) (Number of cupcakes) (Dollars per muffin) (Number of muffins) ITA 115 150 100 2016 2017 2018 Price Year 2016 2017 2018 2 Nominal GDP (Dollars) 290 960 420 4 1 Use the information from the preceding table to fill in the following table. Cupcakes Real GDP (Base year 2016, dollars) GDP Deflator 290 From 2017 to 2018, nominal GDP The inflation rate in 2018 was and real GDP Price 5 2 2 Muffins 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 includes the value of exports, but nominal GDP does not. O Real GDP is not influenced by price changes, but nominal GDP is. Quantity 175 180 160
Consider a simple economy that produces two goods: cupcakes and muffins. The following table shows the prices and quantities of the goods over a three-year period. Quantity Year (Dollars per cupcake) (Number of cupcakes) (Dollars per muffin) (Number of muffins) ITA 115 150 100 2016 2017 2018 Price Year 2016 2017 2018 2 Nominal GDP (Dollars) 290 960 420 4 1 Use the information from the preceding table to fill in the following table. Cupcakes Real GDP (Base year 2016, dollars) GDP Deflator 290 From 2017 to 2018, nominal GDP The inflation rate in 2018 was and real GDP Price 5 2 2 Muffins 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 includes the value of exports, but nominal GDP does not. O Real GDP is not influenced by price changes, but nominal GDP is. Quantity 175 180 160
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 6PA
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