Asap upvote guarantee QUESTION 4 points Sav Using the information below, answer

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QUESTION 4 points Sav Using the information below, answer questions 1-3 Consider an economy that produces only three types of fruit: apples, oranges and bananas. In 2000, the production and price data were as follows Fruit Quantity Price Apples 3000 $2 per unit Bananas 6000 $3 per unit Oranges 8000 $4 per unit In 2001 the production and price data are as follows Fruit Quantity Price Apples 4000 $3 per unit Bananas 14000 $2 per unit Oranges 8000 $5 per unit Nominal GDP equals O $80,000 in 2000 and $56,000 in 2001 $56,000 in 2000 and $82,000 in 2001 $61,000 in 2000 and $82,000 in 2001 $56,000 in 2000 and $80,000 in 2001

Explanation / Answer

1. Nominal GDP = Base year price * quantity of current year

Nominal GDP in 2000= (3000*2 + 6000*3 + 8000*4)

= (6000+ 18000+32000)

= $56,000

Nominal GDP in 2001 = (4000*3 +14000*2 + 8000*5)

= (12000+ 28000+ 40000)

= $80000

Hence, option (d) $56000 in 2000 and $80,000 in 2001

2. Real GDP = Base year price * quantity of base year

Real GDP in 2000= (3000*2 + 6000*3 + 8000*4)

= (6000+ 18000+32000)

= $56,000

Real GDP in 2001 = (4000*2 +14000*3 + 8000*4)

= (8000+ 42000+ 32000)

= $82000

Hence, option (d) $56000 in 2000 and $82,000 in 2001

3.  GDP Deflator = Nominal GDP / Real GDP * 100
GDP Deflator for current year = 97.5609
GDP Deflator for base year = 100

% increment in price level = 97.5609-100 / 100 = -2.4319 %

C) Decreased

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