Reference no: EM1347946

Below are some data from the land of milk and honey.

Year Price of Milk Quantity of Milk Price of Honey Quantity of Honey
2005 $1 100 quarts $2 50 quarts
2006 $1 200 $2 100
2007 $2 200 $4 100

a. Compute nominal GDP, real GDP, and the GDP deáator for each year, using 2005 as the base year.

b. Calculate the percentage change in nominal GDP, real GDP, and the GDP deáator in 2006 and 2007 from the preceding year. For each year, identify the variable that does not change. Explain in words why your answer makes sense.

c. Did economic well-being rise more in 2006 or 2007? Explain.