The question is based on Table 2 below:
Products
Average Price in 2019
Average Price in 2020
Total production in 2019
(units)
Total production in 2020
(units)
Shoes
110
121
3500
3700
Computers
99
148
2000
3000
The economy of Fantasia produces only 2 goods namely Shoes and Computers. The total production and average prices of shoes and computers are displayed in Table 2 above.
Compute the nominal GDP of Fantasia for 2019 and 2020 (hint: calculate the total value of production in each year) (5 marks)
Compute the real GDP of Fantasia in 2020 using 2019 prices (5 marks)
Explain why nominal GDP in 2020 differs from real GDP in 2020 (5 marks)
Calculate the changes in prices for both products. How much has price changed from 2019 to 2020? (5 marks)
Calculate the GDP deflator for 2020 (5 marks)
