Define Real GDP and Nominal GDP? Which is the more important statistic for assessing an economic growth and why?

Question 2: Consider an economy that produces only three types of fruit: apples, oranges, and bananas. In the base year (a few years ago), the production and price data were as follows:

FruitQuantityPrice

Apples3000 bags$2 per bag

Bananas6000 bunches$3 per bunch

Oranges8000 bags$4 per bag

In the current year the production and price data are as follows:

FruitQuantityPrice

Apples4000 bags$3 per bag

Bananas14000 bunches$2 per bunch

Oranges32000 bags$5 per bag

a. Find nominal GOP in the current year and in the base year. What is the percentage increase since the base year?

b. Find real GOP in the current year and in the base year. By what percentage does real GOP increase

from the base year to the current year?

c. Find the GOP deflator for the current year and the base year. By what percentage does the price level change from the base year to the current year?

d. Would you say that the percentage increase in nominal GOP in this economy since the base year is due more to increases in prices or increases in the physical volume of output?