Macroeconomics 5th Edition by Olivier Blanchard

Exercise 4

An economy produces three goods: cars, computers, and oranges. Quantities and prices per unit for years 2006 and 2007 are as follows:
a. What is nominal GDP in 2006 and in 2007 By what percentage does nominal GDP change from 2006 to 2007
b. Using the prices for 2006 as the set of common prices, what is real GDP in 2006 and in 2007 By what percent-age don real GDP change from 2006 to 2007
c. Using the prices for 2007 as the set of common prices, what is real GDP in 2006 and in 2007 By what percent-age does real GDP change from 2006 to 2007
d. Why are the two output growth rates constructed in (b) and (c) different Which one is correct Explain your answer.