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3. Below are some data from the land of milk and honey. Year Price Milk Quantity Milk Price Honey Quantity Honey 2020 $1 100 lbs $2 50 lbs 2021 $1 200 lbs $2 100 lbs 2022 200 lbs $4 100 lbs a) Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2020 as the base year. b) Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in 2021 and 2022 from the preceding year. For each year, identify the variable that does not change. Explain why your answer makes sense. c) Did economic well-being increase more in 2021 or 2022? Explain.

3. Below are some data from the land of milk and honey. Year Price Milk Quantity Milk Price Honey Quantity Honey 2020 $1 100 lbs $2 50 lbs 2021 $1 200 lbs $2 100 lbs 2022 200 lbs $4 100 lbs a) Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2020 as the base year. b) Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in 2021 and 2022 from the preceding year. For each year, identify the variable that does not change. Explain why your answer makes sense. c) Did economic well-being increase more in 2021 or 2022? Explain.

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter15: Measuring A Nation's Income
Section: Chapter Questions
Problem 1CQQ
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3. Below are some data from the land of milk and honey. Year Price Milk Quantity Milk Price Honey Quantity Honey 2020 $1 100 lbs $2 50 lbs 2021 $1 200 lbs $2 100 lbs 2022 200 lbs $4 100 lbs a) Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2020 as the base year. b) Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in 2021 and 2022 from the preceding year. For each year, identify the variable that does not change. Explain why your answer makes sense. c) Did economic well-being increase more in 2021 or 2022? Explain.
Transcribed Image Text:3. Below are some data from the land of milk and honey. Year Price Milk Quantity Milk Price Honey Quantity Honey 2020 $1 100 lbs $2 50 lbs 2021 $1 200 lbs $2 100 lbs 2022 200 lbs $4 100 lbs a) Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2020 as the base year. b) Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in 2021 and 2022 from the preceding year. For each year, identify the variable that does not change. Explain why your answer makes sense. c) Did economic well-being increase more in 2021 or 2022? Explain.
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