Answer the question based on the following information:

Nominal GPD Price Index (gdp deflator) Real gdp

$4,486.0 108

$4710.3 112

(1) between year 1 and year 2 nominal gdp has increased/decreased by what %

(2) between year 1 and year 2 price level has increased/decreased by what %

(3) frank loaned Freda $500 in year 1 to be paid back in year 2. He guessed the inflation would run at 5% and accordingly increase the interest rate on the loan. If the inflation turned out to be equal to the figure calculated in part 2, who won? Explain.

(4) the real gdp in year 1 is ?

(5) the real gdp in year 2 is ?

Answer rating: 100% (QA)

Ans 1 Increase in nominal GDP 47103 44864486 100 005 or 5 2 Inc... View the full answer