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1. Give two reasons why measured GDP does not reflect total production in an economy. Explain using examples.  
2. Suppose that a very simple economy produces three goods: pizzas, haircuts and backpacks. Suppose the quantities produced and their corresponding prices for 2011 and 2015 are as shown in the following table. Calculate real GDP in 2015 assuming the base year is 2011. Explain how you calculated the real GDP in words as well as showing full working out


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