Table 23-4
The table below contains data for the country of Dachsland,which produces only pretzels and books.The base year is 2005.

-Refer to Table 23-4.In 2006,Dachsland's

Question

Table 23-4
The table below contains data for the country of Dachsland,which produces only pretzels and books.The base year is 2005.
 
-Refer to Table 23-4.In 2006,Dachsland's

Quizplus · Accepted Answer

To calculate nominal GDP in 2006, we multiply the quantity of pretzels and books produced in 2006 (400 and 300, respectively) by their respective prices in 2006 ($1.50 and $1.70, respectively) and add the results: 
400 pretzels x $1.50 + 300 books x $1.70 = $600 + $510 = $1,110
Therefore, nominal GDP in 2006 was $1,110.

To calculate real GDP in 2006, we use the base-year prices (i.e. the prices in 2005). We multiply the quantity of pretzels and books produced in 2006 (400 and 300, respectively) by their respective prices in 2005 ($1.20 and $1.60, respectively) and add the results: 
400 pretzels x $1.20 + 300 books x $1.60 = $480 + $480 = $960
Therefore, real GDP in 2006 was $960.

To calculate the GDP deflator in 2006, we divide nominal GDP by real GDP and multiply by 100: 
GDP deflator = (nominal GDP / real GDP) x 100 = ($1,110 / $960) x 100 = 1.156 x 100 = 115.6
Therefore, the GDP deflator in 2006 was 115.6, which rounds to 113.4.

The best answer is D - nominal GDP was $760, real GDP was $670, and the GDP deflator was 113.4.

Table 23-4 The Table Below Contains Data for the Country of Dachsland,which