Consider a simple economy that produces two goods: apples and envelopes. The fol
ID: 1141114 • Letter: C
Question
Consider a simple economy that produces two goods: apples and envelopes. The following table shows the prices and quantities of the goods over a three year period. 4. Real versus nominal GDP Consider a simple economy that produces two goods: apples and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Apples Envelopes Quantity (Number of apples) 110 155 120 Price Price Quantity (Number of envelopes) 150 215 180 (Dollars per apple) (Dollars per envelope) Year 2014 2015 2016 Use the information from the preceding table to fill in the following table Nominal GDP Real GDP (Dollars) (Base year 2014, dollars) GDP Deflator Year 2014 2015 2016 From 2015 to 2016, nominal GDP and real GDP The inflation rate in 2016 was
Explanation / Answer
2014 2015 2016 Nominal Nominal Nominal Real GDP Real GDP Real GDP Price QTY Price Qty Price Qty GDP 2014 GDP 2015 GDP 2016 2014 2015 2016 Apples 1 110 2 155 3 120 110 310 360 110 155 120 envelopes 2 150 4 215 4 180 300 860 720 300 430 360 410 1170 1080 410 585 480 Nominal Real GDP GDP GDP Deflator 2014 410 410 1 2015 1170 585 2 2016 1080 480 2.25 From 2015 to 2016, Nominal GDP falls and Real GDP also falls. Inflation rate in 2016 is 12.5%