3. In a small community, breakfast is the most important meal of the day. Therefore, the only two goods that this community produces are coffee and scones in the following amounts: Coffee Year 2020 2021 Quantity 60 cups 90 cups Price $1.25 $1.45 Quantity 45 units 65 units Scones Price $2.10 $3.95 a) Calculate the inflation rate for 2021 using the GDP deflator method (assume that 2020 is the base year for real GDP calculations). Show your work. b) Calculate the inflation rate for 2021 using the CPI method (assume that 2020 is the base year for CPI calculations). Additionally, assume that the consumption basket for both years contains only 10 cups of coffee and 40 scones. Show your work. c) Compare the results of both inflation calculations and explain why they are similar or different based on the two methods and on the specific data used in this example.

Calculate the rate of inflation or delation between 2014 and 2015.

Consumer Price Index (CPI), and Inflation Use the data below to answer questions 1 and 2: 2021 Base year 2022 2023 100 Loaves of bread $1.75 $2.30 $3.75 50 sticks of butter $4.80 $5.90 $7.15 1. Calculate CPI for each year. 2021: CPI 2022: CPI 2023: CPI 2. CPI in 2022 = 288.35, and in 2024 = 313.55; calculate the inflation rate between 2022 and 2024.

QUESTION 19 In an imaginary economy, consumers buy only sandwiches and hamburgers. The typical consumer consumes 10 sandwiches and 6 hamburgers. A sandwich cost $3 in 2020 and $5.40 in 2021. A hamburger cost $5 in 2020 and $6 in 2021. Which of the following statements is correct? When 2007 is chosen as the base year, the inflation rate is 50 percent in 2007 O When 2006 is chosen as the base year, the consumer price index is 90 in 2007. O When 2006 is chosen as the base year, the inflation rate is 150 percent in 2007. When 2006 is chosen as the base year, the inflation rate is 5 percent in 2007 When 2007 is chosen as the base year, the consumer price index is 100 in 2006. O O

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4. Good X Y Z Quantity 10 20 5 Price in 1999 $5 $10 $6 Price in 2000 $6 $10 $10 Assume year 2000 is the base year. a) Calculate the market basket value for each year. What is the consumer price index in 1999? b) What is the inflation rate between 1999 and 2000?

Question 2 Part (a) Refer to the table below for a very simple economy producing three goods: education, pizzas and cars. Steel panels are needed for car production, cheese is necessary for making pizzas and projectors are used for educational service. Product Steel panels Education Cars Cheese Pizzas Projectors Quantity 40 400 400 2500 2500 4000 2017 Price $5000 $1000 $10000 $1.50 $9.00 $2000 Quantity 50 450 500 3500 3500 5000 2022 Price $6000 $1100 $12000 $1.50 $12.00 $3000 What is the nominal GDP for the economy in 2022? What was the nominal GDP in 2017? What is the real GDP in 2022 using 2017 prices as base year prices? What is the overall real GDP growth rate between 2022 and 2017? Part (b) Assume for an economy, there are 11.5 million people employed, unemployment rate is 5.2%, labor force participation rate is 64%, number of defence force personnel

Consider a simple economy that only produces: pencils, t-shirts, and bananas. Using the information in the table below, calculate the inflation rate for 2020, as measured by the consumer price index. Product Pencils T-shirts Bananas 1.9% 1.1% O-1.1% 1.5% O-1.9% Quantity 8 15 5 Base year price (2010) $2 $5 $1 Price (2019) $3 $7 $1.50 Price (2020) $3.50 $6.75 $1.75

Consider a simple economy that produces two goods: pencils and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per pencil) 2016 2 2017 4 2018 2 Year 2016 2017 2018 Pencils Use the information from the preceding table to fill in the following table. From 2017 to 2018, nominal GDP Quantity (Number of pencils) 125 135 125 The inflation rate in 2018 was Nominal GDP Real GDP (Dollars) (Base year 2016, dollars) GDP Deflator Price (Dollars per envelope) 3 3 3 and real GDP Envelopes Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of envelopes) 155 O Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is. Real GDP does not include the value of intermediate goods and services, but nominal GDP does. 210 165

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