Assume an Economy That Makes Only One Product and That

question 85

Multiple Choice

$$\begin{array} { | c | c | c | } \hline \text { Year } & \text { Units of Output } & \text { Price Per Unit } \\\hline 1 & 3 & \$ 3 \\\hline 2 & 4 & 4 \\\hline 3 & 6 & 5 \\\hline 4 & 7 & 7 \\\hline 5 & 8 & 8 \\\hline\end{array}$$ Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a ?ve-year period are shown in the table. In determining real GDP, the nominal GDP for

• A) each year must be multiplied by the relevant price index.
• B) years 1 and 2 must be in?ated.
• C) years 4 and 5 must be in?ated.
• D) years 1 and 2 must be de?ated.

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