Katrina is an economy with 3 goods only. 2015 is the base year. (18 marks)

GOOD A GOOD B GOOD C

Quantity Price Quantity Price Quantity Price

2014 10 3.2 7 2.0 3 3.0

2015 11 4.5 9 2.5 5 2.5

(a). Calculate the nominal GDP for both years. (4 marks)

(b). Calculate real GDP for both years. (4 marks)

(c). Calculate the nominal and real growth rates. (4 marks)

(d). If the basket only contains Good B and C. Calculate the CPI for both years. Find the inflation rate for 2015. (6 marks)