Question: 1. Consider an economy producing only three goods with the following price and quantity data for three years. Select 2006 as the base year and answer the following questions:

a. How much is nominal GDP for each year?

b. How much is real GDP for each year?

c. Calculate the annual growth rate in 2007 and 2008.

d. Calculate the GDP deflator for each year,

e. Calculate CPI for 2006, 2007, and 2008.

f. Calculate annual inflation rates for 2007 and 2008.

2. If a Canadian tourist drinks German beer in a Cleveland restaurant, how will the U.S. Gross National Product (GNP) be affected if the Cleveland restaurant is owned by a Swiss corporation? How will the U.S. Gross Domestic Product (GDP) be affected?

3. Assume a Nissan dealer in the U.S. bought 30 Maximas directly from Japan at a cost of exist20, 000 per car in the fall of 2002. By December 31, 2002, the dealer had sold 10 of these cars for exist27, 000 each. The remaining 20 cars were sold in early 2003 at an average price of exist28, 000 each.

a. How is the U.S. GNP affected in 2002 and 2003 as a result of this activity, by how much?

b. How are the U.S. GDP and its components (C, I, G, Export, and Import) affected in 2002 and 2003, by how much?