The table below presents the production and prices in a small economy. Use 2017 as the base period.

2017 2018

Item Quantity Price Quantity Price

Hot dogs 4 $1.50 6 $1.75

Pepsi 2 $1.00 3 $1.25

(i) What does real GDP equal to in 2017? [1.5 marks] (ii) What does real GDP equal to in 2018 [1.5 marks] B. 'In an open economy, domestic savings must always equal investment'. Do you agree with the statement? Explain your answer. [8 marks] C. Explain, using an example, how a low real exchange rate affects a country's competitiveness in the export and import markets.