Assume that the economy of Stock land produces four goods, rocks, socks, blocks, and clocks. Rocks and blocks are both used as weapons; they are good substitutes for each other. The quantities and prices for each of the goods in years one and two are given by the following table (assume Year 1 is the base year):

a. What is nominal GDP in year 1?

b. What is real GDP in year 1?

c. What is nominal GDP in year 2?

d. What is real GDP in year 2? (Use year 1 as the base year.)

e. What is the percentage increase in nominal GDP? Real GDP?

f. What is the GDP price deflator?

Transcribed Image Text:

YEAR 1 Good Rocks Socks Blocks Clocks quantity 200 200 200 200 YEAR 2 price $1 $2 $3 $4 good rocks socks blocks clocks quantity 150 220 400 300 price $4 $5 $2 $6 YEAR 1 Good Rocks Socks Blocks Clocks quantity 200 200 200 200 YEAR 2 price $1 $2 $3 $4 good rocks socks blocks clocks quantity 150 220 400 300 price $4 $5 $2 $6

Answer rating: 100% (QA)

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