Question
2 . Real versus nominal GDP Consider a simple economy that produces two goods: apples and erasers. The following table shows the prices and quantities
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. |
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Concepts of Database Management
Authors: Philip J. Pratt, Mary Z. Last
8th edition
1285427106, 978-1285427102
