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

Year Price of Milk Quantity of

Milk

Price of Honey Quantity of

Honey

2014 1$ 100 2$ 50

2015 1.5$ 200 2.5$ 100

2016 2$ 200 2.5$ 100

a. Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2014 as the

base year.

b. Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in

2015 and 2016 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 2015 or 2016?

Explain.