Question: Suppose in 2020 the price and quantity of energy were $1.00 and 50, respectively, and that in 2021 they were $1.04 and 60, respectively. In

Suppose in 2020 the price and quantity of energy were $1.00 and 50, respectively, and that in 2021 they were $1.04 and 60, respectively. In 2020 the price and quantity of all other consumer goods and services were $1.10 and 40, respectively, and in 2021 they were $1.20 and 30, respectively.

1) Using 2020 as a base year and the 2020 bundle as the typical bundle, what is the CPI in 2021?

2) ). What is the rate of inflation between 2020 and 2021?

3) Now suppose that these outputs comprise all of GDP. Keeping 2020 as the base year, what is the GDP deflator for 2021?

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