ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:Exercise 2: GDP and inflation
Consider an economy that produces and consumes haircuts and cars. The next table
contains data on two different years.
2015
2021
$50,000
$60,000
$10
$20
Number of cars
100
120
Number of haircuts 500,000 400,000
Price of a car
Price of a hair cut
a) Compute the following indicators for each year using 2015 as your base year: nominal
GDP, real GDP and the GDP deflator.
b) How much did prices go up between 2015 and 2021? What has been the annual
inflation rate?
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