Consider an economy that produces only chocolate bars. In year 1, the quantity p
ID: 1138141 • Letter: C
Question
Consider an economy that produces only chocolate bars. In year 1, the quantity produced is 3 bars and the price is $2. In year 2, the quantity produced is 5 bars and the price is $4. In year 3, the quantity produced is 7 bars and the price is $6.
Using year 1 as the base year, compute nominal GDP, real GDP, and the GDP deflator for each year.
The percentage growth rate of real GDP from year 2 to year 3 is__%.
The inflation rate as measured by the GDP deflator from year 2 to year 3 is__%.
Year Nominal GDP Real GDP GDP Deflator (Dollars) (Dollars) Year 1 ____ ____ ____ Year 2 ___ ___ ____ Year 3 ____ ___ ___Explanation / Answer
year 1 nominal GDP=3*2=6
year 2 nominal GDP=5*4=20
year 3 nominal GDP=7*6=42
year 1 real GDP=3*2=6
year 2 real GDP=5*2=10
year 3 real GDP=7*2=14
GDP deflator Year 1=(nominal GDP/real GDP)*100=(6/6)*100=100
GDP deflator Year 2=(nominal GDP/real GDP)*100=(20/10)*100=200
GDP deflator Year 3=(nominal GDP/real GDP)*100=(42/14)*100=300
The percentage growth rate of real GDP from year 2 to year 3 is=14/10-1=40%
The inflation rate as measured by the GDP deflator from year 2 to year 3 is=300/200-1=50%
th above is answer..