Consider an economy produces just two final goods: Wine and Cheese. Production and prices in 2020 and 2021 are as follows:

1. What is nominal GDP in 2020 and 2021?
2. Using 2020 prices, what is real GDP in 2020 and 2021? Using this measure of real GDP, what is the growth rate of real GDP from 2020 to 2021?
3. Using the measure of Real GDP calculated in b) what is the GDP deflator in 2020 and 2021? What is the rate of inflation from 2020 to 2021?

Year 2020 2021 quantity price quantity price Wine 10 bottles $2/bottle 1 1 bottles $2/bottle Cheese 10 pounds $1/1b 5 pounds $2/1b