How would this affect the cpi inflation rate

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Reference no: EM131246257

1. In years 1 and 2, there are 2 goods produced in a given economy, hamburgers and pens. In year 1, 10,000 hamburgers are produced and sold at $2 each, and in year 2, 40,000 hamburgers are produced and sold at $2.10 each. In year 1, 15,000 pencils are sold for $2 dollars each and in year 2, 38,000 pencils are sold for $3 each.

2. Now, in the above economy, also suppose that 8,000 notebooks were imported and sold for $1 each in year 1, and 20,000 notebooks imported and sold for $5 each in year 2

a) Calculate nominal GDP in years 1 and 2.

b) What is the CPI inflation rate using year 1 as the base year?

c) What is the GDP deflator inflation rate using year 1 as the base year?

d) Are the two measures equal? Yes or No? And explain.

e) If the price of imported notebooks increases to $10 in year 3, how would this affect the CPI inflation rate? How about the GDP inflation rate? Explain, but no need to show work

Reference no: EM131246257

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