Use the information from the table above to fill in the table below. From 2011 t

Question

Use the information from the table above to fill in the table below. From 2011 to 2012, nominal GDP _____ and real GDP _______. The inflation rate in 2012 was _____. Why is real GDP a more accurate measure of an economy's production than nominal GDP? 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. Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.

Explanation / Answer

For the multiplication question: The answer is the first choice- "Real GDP is not influenced byprice changes, but nominal GDP is", because real GDP is adjustedfor the rate of price inflation while nominal GDP is not.

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