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Question 1 of 2

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Consider an economy that produces and consumes bread and automobiles. In the following table are data for two different years.

2010 2015
Good Quantity Price Quantity Price
Automobiles 100 $50,000 120 $60,000
Bread 500,000 $10 400,000 $20

Using 2010 as the base year, compute the following statistics for each year: nominal GDP, real GDP, the implicit price deflator for GDP, and a fixed weight price index such as the CPI.

2010 2015
Nominal GDP $ $
Real GDP $ $
GDP Deflator
CPI
Review Section 2-1 for discussion of how to compute nominal GDP, real GDP, the GDP deflator, and the CPI.
Review Section 2-1 for discussion of how to compute nominal GDP, real GDP, the GDP deflator, and the CPI.
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      By what percentage did prices rise between 2010 and 2015? Give the answer for each good and also for the two measures of the overall price level by filling out the table below.

      2010 2015 % Change
      Autos $50,000 $60,000 %
      Bread $10 $20 %
      GDP Deflator 1.0 1.52 %
      CPI 1.0 1.60 %
      Review Section 2-2 for details of how Paasche indexes, such as the GDP deflator, differ from Laspeyres indexes, such as the CPI.
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