6 Consider an economy that produces only three types of fruit: apples, oranges, and bananas. In the base year (a few years ago), the production and price data were as follows: Fruit Apples Bananas Oranges Quantity 3,000 bags 6,000 bunches 8,000 bags Price $2 per bag $3 per bunch $4 per bag In the current year the production and price data are as follows: Fruit Apples Bananas Oranges Quantity Price 4,000 bags $3 per bag 14,000 bunches 32,000 bags $2 per bunch $5 per bag

a. Find nominal GDP in the current year and in the base year. What is the percentage increase since the base year?

b. Find real GDP in the current year and in the base year. By what percentage does real GDP increase from the base year to the current year?

c. Find the GDP deflator for the current year and the base year. By what percentage does the price level change from the base year to the current year?

d. Would you say that the percentage increase in nom- inal GDP in this economy since the base year is due more to increases in prices or increases in the phys- ical volume of output?