Suppose GDP Consists of Wheat and Rice

question 210

Multiple Choice

Suppose GDP consists of wheat and rice.In 2005,20 bushels of wheat are sold at $4 per bushel,and 10 bushels of rice are sold at $2 per bushel.In 2004,the price of wheat was $2 per bushel and the price of rice was $1 per bushel.Using 2004 as the base year,it follows that,for 2005,

• A)nominal GDP is $100, real GDP is $50, and the GDP deflator is 50.
• B)nominal GDP is $50, real GDP is $100, and the GDP deflator is 200.
• C)nominal GDP is $100, real GDP is $50, and the GDP deflator is 200.
• D)nominal GDP is $40, real GDP is $100, and the GDP deflator is 50.

---

Definitions:

Shortage

A situation in which the demand for a good or service exceeds its supply in a market.

Price Floor

A minimum price set by the government or a regulatory body, below which a particular good or service cannot legally be sold.

Surplus

An excess quantity, especially referring to the situation where supply exceeds demand in a market, often leading to a decrease in prices.

Binding Minimum Wage

A minimum wage rate that is set above the equilibrium wage in the labor market, causing potential unemployment by forcing employers to pay more than the market rate for labor.