5. Below are some data from the land of milk and honey.

PRICE QUANTITY PRICEOF QUANTITY YEAR OFMILK OFMILK HONEY OF HONEY 2001 $1 100 qts. $2 50 qts.

2002 $1 200 $2 100 2003 $2 200 $4 100

a. Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2001 as the base year.

b. Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in 2002 and 2003 from the preceding year. For each year, identify the variable that does not change. Explain in words why your answer makes sense.

c. Did economic well-being rise more in 2002 or 2003?
Explain.