Table 19-18
$$\begin{array} { | l | c | c | c | c | }
\hline & \mathbf { 2 0 1 1 } & & \mathbf { 2 0 1 6 } & \
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Camera } & 100 & \$ 10 & 120 & \$ 12 \
\hline \text { Legal services } & 50 & 15 & 45 & 20 \
\hline \text { Books } & 200 & 40 & 210 & 45 \
\hline
\end{array}$$ A very simple economy produces three goods: cameras,legal services,and books.The quantities produced and their corresponding prices for 2011 and 2016 are shown in the table above.
-Refer to Table 19-18.What is the GDP deflator in 2016 if 2016 is the base year?

Question

Table 19-18
 $$\begin{array} { | l | c | c | c | c | } 
\hline & \mathbf { 2 0 1 1 } & & \mathbf { 2 0 1 6 } & \
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Camera } & 100 & \$ 10 & 120 & \$ 12 \
\hline \text { Legal services } & 50 & 15 & 45 & 20 \
\hline \text { Books } & 200 & 40 & 210 & 45 \
\hline
\end{array}$$ A very simple economy produces three goods: cameras,legal services,and books.The quantities produced and their corresponding prices for 2011 and 2016 are shown in the table above.
-Refer to Table 19-18.What is the GDP deflator in 2016 if 2016 is the base year?

Quizplus · Accepted Answer

To calculate the GDP deflator, we need to use the formula: 
GDP deflator = (Nominal GDP / Real GDP) x 100
Since 2016 is the base year, the nominal GDP and the real GDP will be the same for 2016.
Nominal GDP in 2016 = (300 x 1) + (400 x 3) + (200 x 10) = 3,700
Real GDP in 2016 = (200 x 1) + (400 x 2) + (200 x 10) = 3,000
Therefore, GDP deflator in 2016 = (3,700 / 3,000) x 100 = 123.33
However, since we are using 2016 as the base year, we need to adjust the result to 100. So, 
GDP deflator in 2016 = 123.33 / 1.2333 = 100. Therefore, the correct answer is C, 100.

Table 19-18 A Very Simple Economy Produces Three Goods: Cameras,legal Services,and Books