Price ($) Quantity 2016 10 200 2017 12 400 2018 30 450 Consider the data in...

Price ($)	Quantity
2016	10	200
2017	12	400
2018	30	450

Consider the data in the table above for a 1-good economy (the only good produced and consumed)

Given that the CPI for 2016 is 100,

Compute the CPI inflation rates for the years 2017 and 2018.
Determine the percentage change in GDP deflator for 2016-2017 and 2017-2018. Compare your results with your answers in (a) and justify.
Explain three problems associated with using CPI to measure cost of living.
The government in 2018 announced and implemented a 10 percent increase in the nominal salary of an average public servant from $500 in 2017. Does the salary of an average public servant have more purchasing power in 2017 or 2018?
Briefly describe the concept of ‘rebasing’. Explain how rebasing affects the income and cost of living estimates of a country.

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Expert Solution

Rahul Sunny answered 1 year ago

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