Assume an Economy That Makes Only One Product and That

question 99

Multiple Choice

Assume an economy that makes only one product and that year 3 is the base year.Output and price data for a five-year period are as follows.Answer the question on the basis of these data. $\begin{array}{c}\begin{array}{c}\\\underline{\text { Year }} \\1 \\2 \\3 \\4 \\5\end{array}\begin{array}{c}\text { Units of}\\\underline{\text { Output}}\\3 \\4 \\6 \\7 \\8\end{array}\begin{array}{c}\text { Price Per } \\\underline{\text { Unit } }\\ \$ 3 \\4 \\5 \\7 \\8\end{array}\end{array}$
Refer to the data.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 inflated.
• C) years 4 and 5 must be inflated.
• D) years 1 and 2 must be deflated.

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