Question

In: Economics

1. Consider the following data for the following economy, where there only two goods: wine and...

1.

Consider the following data for the following economy,

where there only two goods: wine and cheese. In the

following table are data for three different years. Use the

first year, 2016, as the base year in calculating real

GDP, the GDP deflator, and the CPI.

2016

2017

2018

P

Q

P

Q

P

Q

Wine

$2.50

25

$3.50

30

$ 4.00

35

Cheese

$7.00

20

$9.00

20

$ 10.00

25

a.

Calculate the inflation rate b

etween 2016

and 2017 and then between 2017 and 2018

using

a Laspeyres

index (call it the CPI

).

b. Calculate

the inflation rate between 201

6 and 2017 and then

between 2017 and 2018

using

a Paasche index

(call it the

GDP deflator

).

c.

Calculate the growth rate of

nominal GDP between 2016 and 2017

and then between 2017 and 2018.

d. Calculate the grow

th rate of real GDP between 2016 and 2017

and then between 201

7 and 2018.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago
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