A small economy produced and consumed only two goods (computers and pies) in Year 1 and...

A small economy produced and consumed only two goods (computers and pies) in Year 1 and Year 2, in the amounts shown in the table below.

[Read the next sentence very carefully.] Year 1 is the base year for all calculation purposes in this question, and we also assume that the official market basket for the CPI is the actual mix of output produced in Year 1.

	Computers		Pies
	Quantity	Price	Quantity	Price
Year 1	30	$1000	100	$10
Year 2	40	$1100	110	$10

Calculate the nominal GDP for Year 1.
Calculate the real GDP for Year 2.
Calculate the inflation rate from Year 1 to Year 2, based on GDP deflator in two years.
Calculate the cost of the basket for Year 1.
Calculate the CPI for Year 2.
Calculate the inflation rate from Year 1 to Year 2, based on CPI in two year

Expert Solution

Rahul Sunny answered 1 year ago

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A small economy produced and consumed only two goods (computers and pies) in Year 1 and...

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