Assume there are only two goods in the economy, french fries and onion rings. In 2019, 1,000,000
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Assume there are only two goods in the economy, french fries and onion rings. In 2019, 1,000,000 servings of french fries were sold at $0.40 each and 800,000 servings of onion rings at $0.60 each. From 2019 to 2020 the price of french fries rose by 25% and the servings sold fell by 10%; the price of onion rings fell by 15% and the servings sold rose by 5%.
a. Calculate nominal GDP in 2019 and 2020. Calculate real GDP in 2020 using 2019 prices.
b. Why would an assessment of growth using nominal GDP be misguided?
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a Calculations Nominal GDP in 2019 French fries 1 000 000 servings 040 serving 400 000 1 000 000 servings 040 serving 400 000 1000000servings040servin...View the full answer
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