Price of Quantity of cheese $5 Quantity of Wine Price of Year Cheese Wine 2018 2 Blocks $10 4 bottles 2019 $12 3 Blocks $17 3 bottles • Calculate the Nominal Gross Domestic Product Calculate the Real Gross Domestic Product, using 2018 as the base year • Calculate the GDP Deflator

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Consider the following economy which produces two goods, wine and cheese in the
two periods of time.
Price of Quantity of
cheese
$5
Price of
Quantity of
Year
Cheese
2 Blocks
Wine
$10
Wine
2018
4 bottles
2019
$12
3 Blocks
$17
3 bottles
Calculate the Nominal Gross Domestic Product
Calculate the Real Gross Domestic Product, using 2018 as the base year
Calculate the GDP Deflator
Transcribed Image Text:Consider the following economy which produces two goods, wine and cheese in the two periods of time. Price of Quantity of cheese $5 Price of Quantity of Year Cheese 2 Blocks Wine $10 Wine 2018 4 bottles 2019 $12 3 Blocks $17 3 bottles Calculate the Nominal Gross Domestic Product Calculate the Real Gross Domestic Product, using 2018 as the base year Calculate the GDP Deflator
Expert Solution
Step 1
Year Price of cheese Quantity of cheese Price of wine  Quantity of wine 
2018 $5 2 $10 4
2019 $12 3 $17 3

Let the price of cheese and price of wine in 2018 is denoted as Pc2018 and Pw2018 respectively. And price of cheese and price of wine in 2019 is denoted as Pc2019 and Pw2019 respectively.

Quantity of cheese and quantity of wine in 2018 is denoted as Qc2018 and Qw2018.

Quantity of cheese and quantity of wine in 2019 is denoted as Qc2019 and Qw2019.

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