Problem 1: Consider an economy that produces only chocolate bars. In year 1, the quantity produced is 5 bars and the price is $3. In year 2, the quantity produced is 6 bars and the price is $4. In year 3, the quantity produced is 7 bars and the price is $5. Year 1 is the base year. a. What is nominal GDP for each of these three years? b. What is real GDP for each of these years? c. What is the GDP deflator for each of these years? d. What is the inflation rate in year 2 and 3 related to previous one ?

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