3) Below you will find a table of a bundle of outputs and prices of goods in the US. (20 points) 2016 Output 2016 Price Bread 400 $6 per loaf Gallons of 1000 $2 per gallon Water Vegetables 800 $2 per piece (a) Calculate the nominal gross domestic product (GDP) for 2016. Nominal GDP= (Deflator]x[Real GDP)/100 (b) Assume that in the US the GDP deflator (GDP price index) is 100 in the base year and 150 in 2016. Calculate each of the following: (i) The inflation rate, expressed as a percentage, between the base year and this year (ii) 2016's real GDP (c) Now suppose that nominal GDP in 2009 totals $8546 billion and rises to $13.1 trillion ten years later for the United States. The GDP deflator for 2009 is 1.85 and for 2019 is 2.75, in what year is real GDP greater? By how much? How did you arrive at this conclusion? Show all work and fully explain your reasoning. Explain why measuring GDP in real terms is important. Now, use the following table to answer the questions below concerning Peru's GDP. 2010 is the base year. Calculate each of the following: 2010 Quantity 2010 Price 2015 Quantity 2015 Price (base year Food 6 $2.50 8 $2.50 Clothes 5 $6 10 $10 Entertainment 2 $4 5 $5 (i) The nominal gross domestic product (GDP) in 2010 and 2015 (ii) The real GDP in 2015 (d) If in one year the price index is 50 and in the next year the price index is 55, what is the rate of inflation from one year to the next? (f) Now consider the following information for the U.S.: During 2014, consumption expenditures increased by $20.5 billion, gross private domestic investment declined by $8.8 billion, and government expenditures increased by $14.4 billion. In addition, the country experienced a trade deficit of $3.2 billion. Did the U.S.'s GDP increase or decrease during this year? By how much? Show all work and fully explain your reasoning.

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