(a) Use the following table to calculate GDP price deflator in 2019 and 2020 and the change in the overall price level from 2019 to 2020. You will need to round your answer to the nearest whole number.GDP 2019 2020 Nominal GDP $26 000 $28 000 Real GDP$21 000$22 000(b) Consider an economy only producing two goods: pen and bread in both Year 1 and Year 2. Can the Real GDP of this economy increase between Year 1 and Year 2, while the Nominal GDP decreases or remains the same? Explain your answer with a numerical example.

(a) GDP deflator = (Nominal GDP / Real GDP)*100 Year 2019 GDP deflator = ($26000 / $21000)*100 =>…

Answered: Use the following table to calculate…

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter23: Measuring A Nation's Income

Section: Chapter Questions

Problem 4PA

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(a) Use the following table to calculate GDP price deflator in 2019 and 2020 and the change in the overall price level from 2019 to 2020. You will need to round your answer to the nearest whole number.

GDP	2019	2020
Nominal GDP	$26 000	$28 000
Real GDP	$21 000	$22 000

(b) Consider an economy only producing two goods: pen and bread in both Year 1 and Year 2. Can the Real GDP of this economy increase between Year 1 and Year 2, while the Nominal GDP decreases or remains the same? Explain your answer with a numerical example.

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