2 . Real versus nominal GDP

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

Year	Stickers	Donuts
Price	Quantity	Price	Quantity
(Dollars per sticker)	(Number of stickers)	(Dollars per donut)	(Number of donuts)
2018	2	220	4	190
2019	2	160	4	200
2020	4	120	4	180

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)
2018
2019
2020

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 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.

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

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