1. The CPI was 14.7 in 1941 and was 16.3 in 1942. Compute the rate of inflation in 1942.

2. In 1956, GDP was $450B and the GDP deflator was 16.1. In 1957, GDP was $475B and the GDP deflator was 16.6. What was Real GDP for 1957, adjusted to the 1956 price level?

3. List four flaws in GDP as a measure of standard of living.

4.List and explain the two factors that will cause net exports to increase.

5.Explain the misperception effect.