1. Consider the following data on Australian GDP:

Year Nominal GDP GDP Deflator (2007-2008)

2009 1,250,474 102.9

2010 1,301, 551 109.6

a. What was the growth rate of nominal income between 2009 and 2010? (Note: The growth rate is the percentage change from one period to the next. The ABS calculates annual GDP on a financial year basis; from July on year to June the next. The GDP deflator is equal to 100 in the middle of the financial year.)

b. What was the growth rate of the GDP deflator between 2009 and 2010?

c. What was real income in 2009 measured in 2008 prices?

d. What was real income in 2010 measured in 2008 prices?

e. What was the growth rate of real income between 2009 and 2010?

f. Was the growth rate of nominal income higher or lower than the growth rate of real income? Explain

2. The Sydney Morning Herald cost $0.05 in 1970 and $2 in 2013. The average wage in manufacturing was $3.35 per hour in 1970 and $42.10 in 2013.

a. By what percentage did the price of newspaper rise?

b. By what percentage did the wage rise?

c. In each year, how many minutes does a worker have to work to earn enough to buy a newspaper?

d. Did workers' purchasing power in terms of newspaper rise or fall?