Suppose an economy consumes only two goods: food and entertainment. The following table shows quantities consumed and prices for three years: Year 0 (the base year), Year 1, and Year 2. QUESTION; compute inflation rates (from year 0 to year 1 and from year 1 to year 2) based on GDP deflator   Item Year 0 Year 1 Year 2   Quantity (units) Price  ($ / unit) Quantity (units) Price  ($ / unit) Quantity (units) Price  ($ / unit) Food 50 5 75 6 80 4 Entertainment 100 12 110 11 115 14

ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter7: Unemployment And Inflation
Section: Chapter Questions
Problem 3.7P
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Suppose an economy consumes only two goods: food and entertainment. The following table shows quantities consumed and prices for three years: Year 0 (the base year), Year 1, and Year 2.

QUESTION; compute inflation rates (from year 0 to year 1 and from year 1 to year 2) based on GDP deflator

 

Item

Year 0

Year 1

Year 2

 

Quantity (units)

Price 

($ / unit)

Quantity (units)

Price 

($ / unit)

Quantity (units)

Price 

($ / unit)

Food

50

5

75

6

80

4

Entertainment

100

12

110

11

115

14

 

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