A. Explain what is meant by deflation
B. Explain the main causes of deflation.
C. Differentiate between nominal inflation and real inflation.
D. Use the information below to calculate the country’s real GDP in 2020 if the country has a hypothetical nominal GDP of $700 million. (Show all workings)
Production Price per unit
in units (‘000) ($$$)
2022 2023 2022 2023
Cars 15 18 12 500 17 000
Food 100 250 8.5 7.5
Condos 5 10 1 000 1 500
