Question: Consider an economy that produces only chocolate bars. The output in different years is given as follows: (Base year is 2016)

Year Price of a chocolate Bar. Quantity of Chocolate bar

2016 $4 3

2017 5 4

2018 6 5

a.Calculate nominal GDP, real GDP and GDP deflator for each of three years.

b.What is the inflation rate measured by the GDP deflator from 2017 to 2018.

Question 2: What components of GDP would each of the following transactions affect? Explain

a.A family buys a new refrigerator.

b.Aunt Jane buys a new house.

c.Ford sells a Thunderbird (name of vehicle) from its inventory.

d.You buy a pizza.

e.Quebec repaves Highway 50.

f.Your parents buy a bottle of French wine

g.Honda expands its factory in Aliston, Ontario.