1. Defining GDP A. Which is more meaningful to economic policy makers , nominal or real GDP ? Does your answer make any assumptions about what policy makers want to know ? Justify your answer. (10 points ) B. Why is GDP inadequate as a measure of social welfare ? Can you think of any ways to make GDP a better measure of social welfare? (15 points ) 2. Complete Problem #4, Chapter 7, pp. 147 148 . Show your calculations . (25 points : 10, 5, 5, 5) 3. Bureau of Economic Analysis (BEA) reports the following data for the U.S . economy . Year 1. Nominal GDP 1. GDP Price Index . 2007 1. 14,029 '1. 2.9 . 2008 1. 14,292 '1. 2.2 . 2009 1. 13,939 '1. 1.1 . 2010 1. 14,527 '1. 1.2 4. ' A. Compute real GDP for each year. (15 points) B. In your own words, but accurately, characterize the performance of the U.S . economy over the period 2007 2010 . (10 points ) 5. Consumers in an economy buy only three general types of products ,A, B, and C. Changes in the prices of these items over a period are shown below