2009 Quantity 2009 Price 2010 Quantity 2010 Price

food 6 K2.5 8 K2.5

Clothes 5 K6 10 K10

Entertainment 2 K4 5 K5

The outputs and prices of goods and services in Zambia are shown in the table above. Assuming that 2009 is the base year, calculate (a) and (b).

a)The nominal gross domestic product (GDP) in 2010 (3 Marks)

b)The real GDP in 2010 (4 Marks)

c)If in one year the price index is 50 and in the next year the price index is 55, what is the rate of inflation from one year to the next? (3 Marks)