Question: Problem 3. Real and nominal GDP. Year Year Prices Quantities 2020 Cheese 7 500 Wine 22 800 2021 Cheese 5 450 Wine 25 900 Table

Problem 3. Real and nominal GDP. Year Year Prices Quantities 2020 Cheese 7 500 Wine 22 800 2021 Cheese 5 450 Wine 25 900 Table 1: France's production a) Why is it important to adjust nominal GDP for price changes? b) Imagine France's economy only produces and consumes cheese and wine at prices and quantities shown in the tables above. Calculate France's GDP for 2020 and 2021 at current prices (nominal GDP). 2 c) Calculate France's GDP at constant prices when 2020 is the base year (real GDP). What is France's nominal and real GDP growth rate? Explain the differences

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