1. as discussed in class, what is the definition of supply?\n2. suppose that a certain two - good economy…

Explanation:

Step1: Recall GDP deflator formula

The formula for the GDP deflator is $\text{GDP deflator}=\frac{\text{Nominal GDP}}{\text{Real GDP}}\times100$. In a two - good economy with goods $A$ (apples) and $B$ (oranges), nominal GDP is calculated as the sum of the current - price value of all goods produced in the current year. So, $\text{Nominal GDP}=\sum_{i = A,B}P_{i,t}\times Q_{i,t}$, where $P_{i,t}$ is the price of good $i$ in year $t$ and $Q_{i,t}$ is the quantity of good $i$ produced in year $t$. Real GDP is calculated as the sum of the base - year price value of all goods produced in the current year. So, $\text{Real GDP}=\sum_{i = A,B}P_{i,b}\times Q_{i,t}$, where $P_{i,b}$ is the price of good $i$ in the base year and $Q_{i,t}$ is the quantity of good $i$ produced in year $t$.

Answer:

$\text{GDP deflator}=\frac{\sum_{i = \text{apples},\text{oranges}}P_{i,\text{current}}\times Q_{i,\text{current}}}{\sum_{i = \text{apples},\text{oranges}}P_{i,\text{base}}\times Q_{i,\text{current}}}\times100$