Assume a basket of products cost $5 million in the base year and the following is true in 2012:
The same basket of products cost $8 million in 2012
GDP = $14.4 trillion
money wages = $96,000/year
the price of gas = $2.80/gallon
the money supply = $1.6 trillion
Now determine the following and explain:
a. Price Index for 2012
b. Real GDP
c. Real wages
d. Real price of gas
e. Real money supply or real balances
f. Price index for 2013 if the inflation rate is 2% from 2012 to 2013.