Question

country produces only meat and potatoes in the quantities and prices listed below. Use 2011 as the base year. Year Price of Potatoes Quantity of Potatoes Price of Meat Quantity of Meat 2011 $2.00 10 $20 6 2012 $2.50 15 $22 7 2013 $3.50 20 $25 8 In 2012, GDP deflator is

Answer 1

Answer:

112.6471

Explanation:

GDP deflator = nominal GDP in 2012 / real GDP in 2012 x 100

Nominal GDP in 2012 = current year prices x quantity produced

= ($2.50 x 15) + ($22 x 7) = $37.50 + $154 = $191.50

Real GDP in 2012 = base year prices x quantity produced

($2 x 15) + ($20 x 7) = $170

GDP deflator =  $191.50 /  $170 = 1.126471 x 100 = 112.6471