$2.$ Real versus nominal GDP

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

Year

Plastic cups

Seltzers

Price

Quantity

Price

Quantity

$($Dollars per plastic cup$)$

$($Number of plastic cups$)$

$($Dollars per seltzer$)$

$($Number of seltzers$)$

$201922153155$

$202041353210$

$202121503190$

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

Year

Nominal GDP

Real GDP

GDP Deflator

$($Dollars$)$

$($Base year $2019,$ dollars$)$

$2019$

$2020$

$2021$

From $2020$ to $2021,$ nominal GDP $,$ and real GDP $.$

The inflation rate in $2021$ 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$.$

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

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