Consider a macroeconomy that produces smartphones, automobiles and haircuts. Use the information below to answer the following questions. I. Calculate nominal and real GDP for 2017 and 2018 using 2017 as the base year. II. What are the growth rates of nominal and real GDP over this period? Which growth rate is a better indicator of economic growth and why? III. Assuming that the 2017 quantities in the table also represent the typical consumer's basket of goods, calculate the GDP deflator for 2017 and 2018 using 2017 as the base year.

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