ECON UN1105 Study Guide - Final Guide: Price Level

26 views2 pages

goldwasp261

20 Apr 2020

School

Department

Course

Professor

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

Real gdp vs. nominal gdp (and gdp de ator) Drawbacks: over time, prices may change relative to each other, ex: price of smartphones may fall relative to the price of milk, bc this change is not re ected in the xed prices from the base year, the estimate of. Real gdp: the value of nal goods and services evaluated at base-year prices. Nominal gdp: calculated by summing the current values of nal goods and services, real gdp holds prices constant, this makes it a better measure of the changes in the production of goods/services from year to year than nominal gdp. Nominal gdp: the value of nal goods and services evaluated at current-year prices. Real gdp vs nominal gdp: real gdp holds prices constant, this makes it a better measure of the changes in the production of goods/services from year to year than nominal gdp.

Related Questions

Real versus nominal GDP

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

Year	Apples		Muffins
	Price	Quantity	Price	Quantity
	(Dollars per apple)	(Number of apples)	(Dollars per muffin)	(Number of muffins)
2008	1	150	2	160
2009	2	135	4	230
2010	3	110	4	165

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

Year	Nominal GDP	Real GDP
Year	(Dollars)	(The base year 2008, dollars)
2008
2009
2010

1. From 2009 to 2010, nominal GDP (decreased or increased), and real GDP (decreased or increased).

2. Why is real GDP a more accurate measure of an economy's production than nominal GDP?

A. 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.

B. Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.

C. Real GDP is not influenced by price changes, but nominal GDP is.

magentamarten240

Real versus nominal GDP

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

Year	Apples		Oranges
	Price	Quantity	Price	Quantity
	(Dollars per apple)	(Number of apples)	(Dollars per orange)	(Number of oranges)
2010	1	120	1	195
2011	2	130	4	195
2012	4	130	4	145

A. Use the information from the previous table to fill in the following table.

Year	Nominal GDP	Real GDP	GDP Deflator
Year	(Dollars)	(Base year 2010, Dollars)	GDP Deflator
2010
2011
2012

B. From 2011 to 2012, change in nominal GDP is __________, and real GDP is ________.

C. The inflation rate in 2012 was ____________.

D. Why is real GDP a more accurate measure of an economy's production than nominal GDP?

a. Real GDP does not include the value of intermediate goods and services, but nominal GDP does.

b. Real GDP includes the value of exports, but nominal GDP does not.

c. Real GDP is not influenced by price changes, but nominal GDP is.

lilacpig169

Real versus nominal GDP

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

Year	Cupcakes		Erasers
	Price	Quantity	Price	Quantity
	(Dollars per cupcake)	(Number of cupcakes)	(Dollars per eraser)	(Number of erasers)
2010	2	125	3	155
2011	4	135	3	210
2012	2	125	3	165

1. Use the information from the previous table to fill in the following table.

Year	Nominal GDP	Real GDP
Year	(Dollars)	(Base year 2010, dollars)
2010
2011
2012

2. From 2011 to 2012, nominal GDP (increased/decreased) , and real GDP (increased/decreased) .

3. Why is real GDP a more accurate measure of an economy's production than nominal GDP?

a. Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.

b. Real GDP is not influenced by price changes, but nominal GDP is.

c. Real GDP does not include the value of intermediate goods and services, but nominal GDP does.

yellowmule224

ECON UN1105 Study Guide - Final Guide: Price Level

Document Summary

Get access

Related Documents

ECON UN1105 Lecture Notes - Lecture 6: Macroeconomic Model, Root Mean Square, Business Cycle

ECON UN1105 Chapter Notes - Chapter 19: Intermediate Good, Government Spending, Trade Adjustment Assistance

ECON UN1105 Study Guide - Final Guide: Black Market

Related Questions