Test 4: SHORT RESPONSE 2 Distinguish between nominal GDP and Real GDP and define the GDP deflator. An island economy produces only lobsters and crabs. Table 1 gives the quantities produced and prices in 2004, and Table 2 gives the quantities produced and prices in 2005. The base year is 2004. TABLE 1 2004 ITEM QUANTITY PRICE LOBSTERS 90 $15. each CRABS 20 $20. each TABLE 2 2005 ITEM QUANTITY PRICE LOBSTERS 100 $20. each CRABS 25 $20. each Calculate: a. Nominal GDP in 2004 a. $15 * 90 = 1350 b. $20 * 20 = 400 C. 1350 + 400 = 1750 d. Nominal GDP in 2004 = $1750 b. Nominal GDP in 2005 a. $20 * 100 = 2000 b. $20 * 25 = 500 c. 2000 + 500 = 2500 d. Nominal GDP in 2004 = $2500 c. The value of 2005 production in 2004 prices. d. The percentage increase in production when valued at 2004 prices e. The value of 2004 production in 2005 prices f. The percentage increase in production when valued at 2005 prices g. Real GDP in 2004 and 2005 (use the chained-dollar method) h. The GDP deflator in 2005