5. Real versus nominal GDP Consider a simple economy that produces two goods: pens and envelopes. The following table sh

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5 Real Versus Nominal Gdp Consider A Simple Economy That Produces Two Goods Pens And Envelopes The Following Table Sh 1 (26.03 KiB) Viewed 12 times

5. Real versus nominal GDP Consider a simple economy that produces two goods: pens and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Year 2018 2019 2020 Year 2018 2019 2020 2 4 Pens Price Quantity Price (Dollars per pen) (Number of pens) (Dollars per envelope) 1 125 1 170 4 150 Use the information from the preceding table to fill in the following table. Nominal GDP (Dollars) Real GDP (Base year 2018, dollars) GDP Deflator From 2019 to 2020, nominal GDP The inflation rate in 2020 was 4 and real GDP Envelopes Quantity (Number of envelopes) 200 230 Why is real GDP a more accurate measure of an economy's production than nominal GDP? 170 Real GDP does not include the value of intermediate goods and services, but nominal GDP does. 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.