Exhibit: Quantity Consumed and Price of Good
Base Year Later Year
Price of Good 100 200
Quantity of Good A 100 200
Price of good B 100 100
Quantity of good B 100 100
In the exhibit, the citizens of country XYZ come to desire more of good A. As a result, the quantity and price of the good both rise.
a. Compute nominal GDP in the base year and later year.
b. Compute real GDP in the base and later years (in base-year prices).
c. Compute the GDP deflator in the later year, using your answers to parts a and b.
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