a. Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2016 as the base year. b. Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in 2017 and 2018 from the preceding year. For each

Economics: Private and Public Choice (MindTap Course List)
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Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
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Chapter8: Economic Fluctuations, Unemployment, And Inflation
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Below are some data from the land of milk and
honey.
Price of Quantity Price of
Year
Quantity of
Honey
milk
of milk
Honey
2016 $1
100 quarts
$2
50 quarts
2017 $1
200
$2
100
2018 $2
200
$4
100
a. Compute nominal GDP, real GDP, and the
GDP deflator for each year, using 2016 as the
base year.
b. Compute the percentage change in nominal
GDP, real GDP, and the GDP deflator in 2017
and 2018 from the preceding year. For each
year, identify the variable that does not change.
Explain why your answer makes sense.
Transcribed Image Text:Below are some data from the land of milk and honey. Price of Quantity Price of Year Quantity of Honey milk of milk Honey 2016 $1 100 quarts $2 50 quarts 2017 $1 200 $2 100 2018 $2 200 $4 100 a. Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2016 as the base year. b. Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in 2017 and 2018 from the preceding year. For each year, identify the variable that does not change. Explain why your answer makes sense.
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