Question

5. Inflation and CPI Suppose in Economy A, the final goods produced in year 2015, 2016 and 2017 are milk, beef, gasoline, cloth. The quantities (Q) produced and prices (P) are given by the following: Year 2015 Qmilk Pmilk 200 2.35 220 2.49 233 2.79 (beer Pbeer lgasolin 120 3.30 400 123 3.35 430 145 3.47 440 Pgasoline (cloth Pcloth 1.12 510 2.33 1.15 512 2.47 1.20 523 2.67 2016 2017 Let 2015 be the base year and assume the CPI basket consists of 8 units of milk, 2 units of beer, 10 units of gasoline, and 5 units of cloth. Fill in the blanks in the following table: Year Nominal GDP Real GDP СРІ GDP Deflator 100 GDP Inflation Х CPI Inflation X 100 2015 2016 2017

Answer 1

Year	Q milk	P milk	Q beer	P beer	Q gasoline	P gasoline	Q cloth	P cloth
2015	200	2.35	120	3.3	400	1.12	510	2.33
2016	220	2.49	123	3.35	430	1.15	512	2.47
2017	233	2.79	145	3.47	440	1.2	523	2.67

Nominal GDP is calculated as: Prine in current year * Quantity in current year

Real GDP is calculated as: Price in base year * Quantity in current years

GDP Deflator = Nominal GDP / Real GDP

CPI is calculated as: Price in current year * Basket defined

Year	Nominal GDP	Real GDP	GDP Deflator	GDP Inflation	CPI	CPI Inflation
2015	2,502.30	2,502.30	100.00	-	100.00	-
2016	2,718.99	2,597.46	103.80	3.8%	104.60	4.6%
2017	3,077.63	2,737.44	105.39	1.5%	113.18	8.2%