1. A mining company mines ore, which it sells to a refiner for $100. The refiner refines the ore into metal, which it sells to a plane factory for $150. The plane factory builds the metal into an airplane, which it sells to a retailer for $200. The retailer sells the airplane to an airline company for $210. In this example, what are the intermediate goods and what is the final output? How much income do the mining company, the refiner, the plane factory, and the retailer earn? What is the value of final output? How do your answers illustrate the identity ‘output = income’?
2. Discuss the problem(s) with the following statement.

" Gross Domestic Product in the United States is approximately 425 times larger now than it was in 1900. Therefore, Americans are 425 times as well off as they were in 1900.".

For Questions (3) – (5), refer to the following chart.

Suppose that apples and oranges are the only two goods available in the economy, and that they are sold in the quantities and prices indicated in the following table.

3. Calculate nominal GDP in each year. Calculate real GDP in each year in 1994 dollars. In which year is there economic growth?
4. Suppose the CPI is defined as the price of a basket containing three apples and 6 Oranges. Compute the CPI inflation rate from 1994 to 1995 and from 1995 to 1996.
5. Compute the implicit GDP deflator for each year, with 1994 as the base year. Based on the implicit GDP deflator, what were the inflation rates for 1994-1995 and 1995-1996.