Suppose that a simple economy produces only four goods and services in 2010: shoes, DVDs, tomatoes, and catsup. Assume one-half of the tomatoes are used in making the catsup and the other of tomatoes are purchased by households.
A. What is the nominal GDP in 2010 for this simple economy?
B. In 2011, suppose that the whole tomatoes products were used in making the catsup, and at the same time, the price of shoes, DVDs, tomatoes, and catsup increased three-fold for each and their respective quantities also increased twice. Calculate real GDP, GDP deflator, and rate of inflation in 2011.