Exercise n.2 Suppose that there are only 2 goods in the economy, A and B. We have yearly data on prices (p) and quantities produced (q) for each good for the period 2009-2011. Year PA gA PB gB 2009 2 3 3 2010 2 2 4 2 2011 2 4 3 3 a) Compute the nominal GDP for each year. b) Compute the GDP deflator for each year using the 2010 as base-year. Compute the inflation rate. c) Suppose that the basket of goods used by the Government to compute the CPI consists of 2 units of good A and 3 units of good B. Using 2010 as the base-year, compute the CPI and also the CPI based inflation rate for each year. How do the numbers for CPI based inflation compare with the numbers for GDP deflator based inflation obtained in the previous point? Why?Exercise n.2 Suppose that there are only 2 goods in the economy, A and B. We have yearly data on prices (p) and quantities produced (q) for each good for the period 2009-2011. Year PA gA PB gB 2009 2 3 3 2010 2 2 4 2 2011 2 4 3 3 a) Compute the nominal GDP for each year. b) Compute the GDP deflator for each year using the 2010 as base-year. Compute the inflation rate. c) Suppose that the basket of goods used by the Government to compute the CPI consists of 2 units of good A and 3 units of good B. Using 2010 as the base-year, compute the CPI and also the CPI based inflation rate for each year. How do the numbers for CPI based inflation compare with the numbers for GDP deflator based inflation obtained in the previous point? Why