Question 3 (30 points) Consider an economy that produces only the following amount of products with the correspond- ing prices in two different years: Version 1 Vegetables Fruits Laptops Bus Ticket Semiconductor Table 1: Production Statistics Year 1 Quantity Year 1 Price Year 2 Quantity 5 1.00 6 3 1.00 4 3 3.00 3 2 2.00 2 2 4.00 3 Year 2 Price 6.00 1.50 2.50 2.50 5.00(a) Calculate the nominal GDP in both years.(b) Assuming that the year 1 is the base year, calculate the real GDP in both years.
(c) Assuming that the year 2 is the base year, calculate the real GDP in both years.
(d) Calculate the GDP deflators both when the year 1 and year 2 are the base years.
(e) Construct a CPI basket that include one unit from only the final consumption products inthe above table. If you index the CPI at 100 in year 1, what is the level of the CPI in year 2?
(f) What is the inflation rate in this economy? If is different from the change in the GDPdeflators? Why or why not?