use the table below to answer the questions 1-6.

Nominal GDP GDP deflator Population

Nominal GDPGDP deflatorPopulation

Year 3.$5,000 125 11

Year 4.$6,600 150 12

1. What is the real GDP in Year 3?

2. What is the real GDP in Year 4?

3. What is the real GDP per capita in Year 3?

4. What is the real GDP per capita in Year 4?

5. What is the rate of real output growth between Years 3 and 4?

6. What is the rate of real output growth per capita between Years 3 and 4?

(Hint: Use per capita data in the output growth rate formula.)

The economy of Grossmania produces three goods: Widgets, Gizmos, and Thingamajigs. The accompanying table shows the output and prices for years 2006 and 2007. (Hint: GDP, in its most basic form, is P x Q. You take the quantity of output and multiply by the price of output.)

WeightGizmosThingamajigs

Year pricequantitypricequantitypricequantity

2006$1001$108$54

2007$1101$1210$45

7. Calculate the nominal GDP for: a. 2006 b. 2007.

8. Compute the percentage of growth in nominal GDP from 2006 to 2007.

9. Using 2006 as the base year, calculate the real GDP for 2007.

10. What is the GDP deflator for 2007? What was the inflation rate between 2006 and 2007?

11. Compute the real rate of output growth from 2006 to 2007.

12. Which of the following is true of real GDP?

I. It is adjusted for changes in prices.

II. It is always equal to nominal GDP.

III. It increases whenever aggregate output increases.

a. I only

b. II only

c. III only

d. I and III

e. I, II, and III

13. The best measure for comparing a country's aggregate output over time is

a. Nominal GDP.

b. Real GDP.

c. Nominal GDP per capita.

d. Real GDP per capita.

e. Average GDP per capita.

For questions 14-15 use the information provided in the table below for an economy that produces only apples and oranges. Assume year 1 is the base year.

Year 1Year 2

Quantity of apples3,0004,000

Price of apples$0.20$0.30

Quantity of oranges2,0003,000

Price of oranges$0.40$0.50

14. What was the value of real GDP in each year?

Year 1Year 2

a. $1,400 $2,700

b. $1,900$2,700

c. $1,400 $2,000

d. $1,900$2,000

e. $1,400 $1,900

15. What is the GDP Deflator for Year 2?

a. 105

b. 135

c. 136

d. 142

e. 143