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1. In years 1 and 2, there are 2 goods produced in a given economy, sausages and pens. In year 1, 10,000 sausages are produced and sold at $2 each, and in year 2, 20,000 sausages are produced and sold at $2.10 each. In year 1, 15,000 pens are sold for $2 dollars each and in year 2, 48,000 pens are sold for $3 each a) Calculate nominal GDP in years 1 and 2. b) Calculate real GDP in years 1 and 2 using year 1 as the base year. Next, calculate the percentage c) d) What is the CPI inflation rate using year 1 as the base year? Is this equal to the GDP deflator increase in real GDP from year 1 to year 2. Calculate the GDP deflator and the percentage inflation rate from year 1 to year 2 using year 1 as the base year. inflation rate?

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