Name___________________________________ ECON 201 Homework….Due September 19, 2001

An economy produces two kinds of output, food and clothing. Prices and quantities of each good are given below for three years. Year 1 is the base year.
 
 
Food
Clothing
Year
P
Q
P
Q
1
$1.00
50
$5.00
10
2
$2.00
60
$6.00
9
3
$1.50
70
$7.00
11

Fill in the values in the following Table
 
 
Year 1
Year 2
Year 3
Nominal GDP
$100
 
 
Real GDP
 
 
 
GDP Deflator
100
 
 
Inflation (Based on GDP deflator) XXXXXXXXXX
XXXXXXXXXX
 
 
Real Growth (%) XXXXXXXXXX
 
 
Now assume the typical consumer purchases a market basket of 5 units of food and 1 unit of clothing per year. Calculate the consumer price index and the rate of inflation based on it.
Consumer Price Index (CPI)
100
 
 
Inflation (Based on CPI) XXXXXXXXXX