Suppose that we are in a small, local economy that produces three goods. They are: (i) Food, (ii) Gas, and (iii) Housing. The prices for reach of these goods from 2019-2022 are: Good 2019 Price 2019 Quantity 2020 Price 2020 Quantity Food 10 12 14 15 Gas 2 2 1.50 1.50 Housing 2,000 2,500 2,200 1,800 Good 2021 Price 2021 Quantity 2022 Price 2022 Quantity Food 12 15 15 16 Gas 3 2 4 2.50 Housing 2,300 2,200 2,400 2,300 1. Calculate the Nominal GDP for this economy for 2019, 2020, 2021, and 2022. 2. Calculate Real GDP for this economy for 2019, 2020, 2021, and 2022, using the year 2019 as the base year. 3. Calculate Real GDP for this economy for 2019, 2020, 2021, and 2022, using the year 2020 as the base year. 4. Calculate the Real GDP Deflators for 2021 and 2022 using the Nominal GDPs you calculated in Q1 and the Real GDPs you calculated in Q3. 5. What is the annual inflation rate for 2022 according to the Real GDP Deflators you calculated in Q4? Now suppose that the Local Government is interested in building a Consumer Price Index (CPI) to measure inflation over this same period. They define the CPI reference bundle to be made up of: • 10 units of Food • 10 units of Gas • 1 unit if Housing 6. Calculate the CPI for 2021 and 2022, using 2019 as the base year. 7. What is the annual inflation rate for 2022 according to the CPI values that you calculated in Q6? 8. Calculate the CPI for 2021 and 2022, using 2020 as the base year. 9. What is the annual inflation rate for 2022 according to the CPI values that you calculated in Q8?
Suppose that we are in a small, local economy that produces three goods. They are: (i) Food, (ii)
Gas, and (iii) Housing. The prices for reach of these goods from 2019-2022 are:
Good 2019
Food 10 12 14 15
Gas 2 2 1.50 1.50
Housing 2,000 2,500 2,200 1,800
Good 2021 Price 2021 Quantity 2022 Price 2022 Quantity
Food 12 15 15 16
Gas 3 2 4 2.50
Housing 2,300 2,200 2,400 2,300
1. Calculate the Nominal
2. Calculate Real GDP for this economy for 2019, 2020, 2021, and 2022, using the year 2019
as the base year.
3. Calculate Real GDP for this economy for 2019, 2020, 2021, and 2022, using the year 2020
as the base year.
4. Calculate the Real GDP Deflators for 2021 and 2022 using the Nominal GDPs you
calculated in Q1 and the Real GDPs you calculated in Q3.
5. What is the annual inflation rate for 2022 according to the Real GDP Deflators you
calculated in Q4?
Now suppose that the Local Government is interested in building a
to measure inflation over this same period. They define the CPI reference bundle to be made up
of:
• 10 units of Food
• 10 units of Gas
• 1 unit if Housing
6. Calculate the CPI for 2021 and 2022, using 2019 as the base year.
7. What is the annual inflation rate for 2022 according to the CPI values that you calculated
in Q6?
8. Calculate the CPI for 2021 and 2022, using 2020 as the base year.
9. What is the annual inflation rate for 2022 according to the CPI values that you calculated
in Q8?
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