I want to get 2nd pic\'s answer i do not want to get any pics. I want to copy th

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I want to get 2nd pic's answer

i do not want to get any pics. I want to copy the answer.

Suppose that a very simple economy produces four goods: cookies, locksmith services, pickup trucks, and police services. Half of the cookies are purchased by households and half are purchased by businesses. Suppose the quantities produced and their corresponding prices for 2007 and 2013 are shown in the table below. The police services are not sold, so there is no price, but each police department costs $750,000 each to operate in each year. 2013 Quantity 340,000 $0.70 7,600 2007 Product 2007 Price 2013 Price Quantity Cookies 300,000 $0.50 Locksmiths 7,000 Pickups Police $65 $34,000 $60 50 $30,000 52 3 3

Explanation / Answer

Nominal GDP in 2007= (300000*0.50)+(7000*60)+(50*30000)-(3*750000)=-180000

Real GDP in 2007 will be same as nominal GDP as the base year is 2007.

GDP price deflator=(nominal GDP*100/Real GDP)=-180000*100/-180000=100

Nominal GDP in 2013 =(340000*0.70)+(7600*65)+(52*34000)-(3*750000)=250000

Real GDP in 2013 =(340000*0.50)+(7600*60)+(52*30000)-(3*750000)=-64000

GDP price deflator= -(250000*100/64000)=-390.625

GDP price deflator in 2007 was 100 and in 2013 was 390.63

Therefore price has risen by 290.63% in the period from 2007 to 2013.

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