1. Real gross domestic product A) is a measure of inflation B) will increase if there is an increase in the price level C) will increase if there is an increase in the level of output during a given year D) can change from one year to the next even if there is no production of goods E) Both B and C are correct 2. Suppose that real GDP increases by 5% while the population of a country increases by 7%. Then what happens to GDP per capita? A) output per person necessarily increases output per person necessarily decreases output per person necessarily remains unchanged D) there is not enough information to determine what happens to output per person Complete the following chart: Find the value of Nominal GDP for year 1 and Real GDP for year 2 using the price of year 1 as the based year: Price Number of Nominal Price Number of Real GDP Year 1 Goods Year 1 Value of Year 2 Goods Year Value of Good Goods Year 1 2 Goods Year 2 Quarts of Ice Cream $3.50 3 $4.00 5 Bottles of Shampoo $1.90 1 $3.00 2 Jars of Peanut Butter $1.50 w $2.00 2 Nominal GDP Real GDP S S Illustrate and explain the business cycle: GDP Calculate GOP Time