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Consider a simple economy that produces two goods: pens and erasers. The following table shows the prices and quantities of the goods over a...
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Question

Consider a simple economy that produces two goods: pens and erasers.

The following table shows the prices and quantities of the goods over a three-year period.
Year
Pens
Erasers
Price
Quantity
Price
Quantity
(Dollars per pen)
(Number of pens)
(Dollars per eraser)
(Number of erasers)
201811201195201921304195202041304145
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)
201820192020
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 includes the value of exports, but nominal GDP does not.
Real GDP is not influenced by price changes, but nominal GDP is.
Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services an economy consumes.

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Subject: Business, Economics

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