Question

Question 1 1 pts Suppose GDP consists of wheat and rice. In 2005, 20 bushels of wheat are sold at $4 per bushel, and 10 bushels of rice are sold at $2 per bushel. In 2004, 20 bushels of wheat are sold at $2 per bushel and 10 bushels of rice are sold at $1 per bushel. Using 2004 as the base year, it follows that, for 2005. Nominal GDP is $100, real GDP is $50, and the GDP Deflator is 200. Nominal GDP is $100, real GDP is $50, and the GDP Deflator is 50. Nominal GDP is $40,real GDP is $100, and the GDP Deflator is 50. Nominal GDP is $50, real GDP is $100, and the GDP Deflator is 200.

Answer 1

In 2005

Nominal gdp = 20*4 + 10*2= 100

Real gdp = 20*2 + 10*1= 50

Gdp deflator = 100*100/50= 200

Nominal gdp is $100, real gdp is $50, and the GDP deflator is 200