Question

Q.1. Consider Country Timbuktu whose economy produces only three items: Tomatoes, Tofu
and Tacos. The base year is arbitrarily chosen as 2012.
(12)
Good Quantity (2012) Price (2012) Quantity (2019) Price (2019)
Tomatoes 1,000
$1.00
1,200
$1.50
Tofu 2.000
$3.00
1,800
$4.00
Tacos 600
$5.00
500
$6.00
a. Find nominal GDP in the current year (2019) and in the base year (2012). What is the
percentage change in nominal GDP from 2012 to 2019? Show any general formulas you
use to find this answer and show all your work in finding your answer.
b. Find real GDP in the current year (2019) and the base year (2012) on a 100-point scale.
Show any general formulas you use to find this answer and show all your work in finding
your answer.
c. What is the percentage change in real GDP from 2012 to 2019? Show any general
formulas you use and your work to receive full credit. Provide an interpretation of your
answer.
d. Find the GDP deflator for the current year (2019) and the base year (2012). Show any
general formulas you use to find this answer and show all your work in finding your
answer. Round your answer to the nearest tenth.
e. By what percentage does the price level change from the base year to the current year
using the GDP deflator? Show any general formulas you use to find this answer and show
all your work in finding your answer.
f. Would you say that the percentage increase in nominal GDP in this economy from 2012 to
2019 is due more to increases in prices or increases in the amount of output?​

Answer 1

Answer:

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Explanation:

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