3 Inflation
1. The economy produces 2 types of goods. Over the past 3 years, the Bureau of Economic Analysis (BEA) recorded:
Table 1: Quantity and price of output
2014 P Q 2015 P Q 2016 P Q
Good A 10 20 11 20 12 21 Quality and price of output
Good B 100 40 100 45 105 45
- Compute Nominal GDP and the Nominal GDP growth rate in 2015 and 2016.
- Compute Real GDP and the Real GDP growth rate in 2015 and 2016. Use 2014 as the base year.
- Compute the GDP deflator and the growth in the deflator in 2015 and 2016.