2 . Real versus nominal GDP

Consider a simple economy that produces two goods: apples and erasers. The following table shows the prices and quantities of the goods over a three-year period.

Year	Apples	Erasers
Price	Quantity	Price	Quantity
(Dollars per apple)	(Number of apples)	(Dollars per eraser)	(Number of erasers)
2018	2	125	3	155
2019	4	135	3	210
2020	2	125	3	165

Use the information from the preceding table to fill in the following table.

Year	Nominal GDP	Real GDP	GDP Deflator
(Dollars)	(Base year 2018, dollars)
2018
2019
2020			From 2019 to 2020, nominal GDP , and real GDP . The inflation rate in 2020 was . Why is real GDP a more accurate measure of an economy's production than nominal GDP? Real GDP does not include the value of intermediate goods and services, but nominal GDP does. Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is.