1.Given the followinginformation, answer the following questions. Use the backside of this page if you need additional room. Circle your final answer for each part.

1999 Prices

1999 Quantities

soybeans

$10/bu

50,000 bushels

DVD players

$250/unit

1,000 units

1) If these are the only two goodsproduced, what is the nominal GDP for1999?

2) Suppose that real GDP for 1999 is$450,000. Compute the GDP deflator for1999?

3) If the GDP deflator was 160 in1998, what is the inflation rate between 1998 and1999?

2.A borrower negotiates a$20,000 loan at3% interest in1993, when the value of the CPI is 100. In 2000 the outstanding balance on the loan is$10,000. If the CPI is 130 in2000, how much is the outstanding balance of the loan in 1993dollars? How has inflation since 1993 affected theborrower?