In years 1 and 2, there are 2 goods produced in a given economy, hamburgers and pens. In year 1, 10,000 hamburgers are produced and sold at $2 each, and in year 2, 40,000 hamburgers are produced and sold at $2.10 each. In year 1, 15,000 pencils are sold for $2 dollars each and in year 2, 38,000 pencils 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 increase in real GDP from year 1 to year 2.
c) Calculate the GDP deflator and the percentage inflation rate from year 1 to year 2 using year 1 as the base year.
d) What is the CPI inflation rate using year 1 as the base year? Is this equal to the GDP deflator inflation rate?