Y = GDP = C + I + G + NX. If NX = 0, this could mean: Choose the right answer (2 points)
a. The economy is closed - there are no imports and no exports
b. The economy is open, but the value of exports equals the value of imports
c. Both a and b are plausible
d. There is not enough information to answer the question
2. Say there was a change in nominal GDP in Country A between 2000 and 2004 which happens to use
dollars as its main currency. In year 2000, the nominal GDP of Country A was $1000. In year 2004,
nominal GDP in country A was $1500 or a rise 50%. Actual total production, Q, in Country A also increased
by 50% between 2000 and 2004. (2 points for each correct answer)
a. What can you say about the change in the price
level of Country A between 2000 and 2004?
b. If real GDP was $1000 in year 2000, what will the
amount of real GDP be in Country A in year 2004?
c. If year 2000 was the base year for the GDP Deflator,
what number would the GDP deflator be in year 2000?
d. What number would the GDP deflator be in year 2004?