MACRO FRQ question

The tables below show data for two island nations, Astradale and Upshallert. Astradale Upshallert Nominal GDP Nominal GDP Year Population Year Population GDP Deflator GDP Deflator H $500 100 25 $200 100 5 2 $990 110 30 2 $840 105 10 (a) Calculate each of the following for Year 2. Show your work. (i) Real GDP per capita for Astradale (ii) Real GDP per capita for Upshallert (b) If Astradale and Upshallert have the same velocity of money in Year 2, which nation must have the higher money supply in Year 2 ? Explain. (c) Calculate each of the following in Year 2. Show your work. (i) The inflation rate in Astradale (ii) The inflation rate in Upshallert(d) Based on your answer to part (c), if the nominal interest rate is the same for both nations in Year 2, which nation experiences the higher real interest rate in Year 2 ? Explain. (e) Upshallert produces consumer goods and capital goods. While maintaining full employment, Upshallert decides to allocate fewer resources to the production of consumer goods. What will be the effect on the long-run economic growth rate in Upshallert? Explain