5. Income, prices, money and inflation. (5*8=40 pts) The following table shows the unit prices and quantities of three different goods produced in Biwei's economy at different periods. T=1 T=2 T=3 Products Price Quantity Price Quantity Price Quantity Apple $ 10 5 $ 12 5 $ 10 6 Banana $5 10 $6 10 $6 10 Cherry $ 25 2 $ 30 2 $ 30 2 Nominal Income Real Income a. Calculate Biwei's nominal income at T= 1, 2, 3 and fill in the table. b. Calculate Biwei's the real income at T=1, 2, 3 with base year T=1 and fill in the table. C. Using GDP deflator method, calculate the inflation rate from T=1 to 2 and the inflation rate from T=2 to 3. d. Using CPI method with base year T=1, calculate the inflation rates from T=1 to 2 and T=2 to 3. e. Based on MV=PQ, suppose V=1, what are the money stock values M at T=1, 2, 3? f. From T=1 to T=2, according to the quantity theory, what causes P to rise? [Hint: V, Q is constant.] g. From T=2 to T=3, according to the quantity theory, what causes P to fall? [Hint: V, M is constant.] h. If V doubles at T=4, how would the prices of products change given M, Q constant