Question

Q6The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2008. Prices and Quantities Year Price of Cereal Quantity of Price of Milk Quantity of Cereal Milk 2008 $4.00 $1.50 150 2009 $4.00 100 $2.00 180 2010 $5.00 $2.50 2011 $6.00 150 $3.50 90 200 200 Refer to Table 10-4. In 2008, this country's nominal GDP was greater than real GDP, and the GDP deflator was greater than 100. b. nominal GDP was equal to real GDP, and the GDP deflator was equal to 1. c. nominal GDP was less than real GDP, and the GDP deflator was less than 100. d. nominal GDP was equal to real GDP, and the GDP deflator was equal to 100.

Answer 1

6. In 2008 , Nominal GDP = (4)(90)+(1.50)(150)= $(360+225)= $585

Because base year is 2008 , So, Real GDP = Nominal GDP = $585

GDP deflator = (Nominal GDP/Real GDP)100 = (585/585)100= 100

Hence, option(D) is correct i.e nominal GDP was equal to real GDP and the GDPdeflator was equal to 100.

7. In 2009 : Nominal GDP =(4)(100)+ (2)(180)= $(400+360)= $760

Real GDP = (4)(100)+(1.50)(180)= $(400+270)= $670

GDP deflator = (760/670)100= 113.4

Hence, option(D) is correct.