Please analyse it. How we found the GDP deflator and the CPI. I'm confused
PART I -70 MARKS (2 MARKS PER QUESTION) . Questions 1 - Question 2: An open economy consumes three goods only. The following table shows the prices and the quantities exchanged in 2013 and 2014. The year of 2013 is the base year. 2013 2014 Goods Price Quantity exchanged Price Quantity exchanged 1 $60 80 $70 50 2 $28 50 $30 45 3 $42 40 $40 30 Additional information: Households purchased 60% of good 1, and the remaining shares of good 1 were split equally between firms and government. Firms purchased 40% of good 2 exchanged, and the remaining was purchased by households. In addition, 25% of good 2 exchanged were imported goods and they were all bought by households. Good 3 was bought by households, (domestic) government, and foreigners only, and their shares of purchases were 25%, 35% and 40% respectively. Unless otherwise stated, the goods are produced within the economy in this question. Question 1 From 2013 to 2014, what was the percentage change in the GDP deflator? Keep your answer to 2 decimal places & be sure to show your work. . GDP deflator 2014 $5712.5 x 100 = 109.75 $5205 Percentage change (in % terms): 9.75% or by 9.75% Question 2 How much does the cost of a consumption basket bought by typical households change from 2013 to 2014? Keep your answer to 2 decimal places & be sure to show your work. CP 2014 $4660 x 100 = 112.56; $4140 CP.2013 = 100 Percentage change (in % terms): 12.56% or by 12.56% PART I -70 MARKS (2 MARKS PER QUESTION) . Questions 1 - Question 2: An open economy consumes three goods only. The following table shows the prices and the quantities exchanged in 2013 and 2014. The year of 2013 is the base year. 2013 2014 Goods Price Quantity exchanged Price Quantity exchanged 1 $60 80 $70 50 2 $28 50 $30 45 3 $42 40 $40 30 Additional information: Households purchased 60% of good 1, and the remaining shares of good 1 were split equally between firms and government. Firms purchased 40% of good 2 exchanged, and the remaining was purchased by households. In addition, 25% of good 2 exchanged were imported goods and they were all bought by households. Good 3 was bought by households, (domestic) government, and foreigners only, and their shares of purchases were 25%, 35% and 40% respectively. Unless otherwise stated, the goods are produced within the economy in this question. Question 1 From 2013 to 2014, what was the percentage change in the GDP deflator? Keep your answer to 2 decimal places & be sure to show your work. . GDP deflator 2014 $5712.5 x 100 = 109.75 $5205 Percentage change (in % terms): 9.75% or by 9.75% Question 2 How much does the cost of a consumption basket bought by typical households change from 2013 to 2014? Keep your answer to 2 decimal places & be sure to show your work. CP 2014 $4660 x 100 = 112.56; $4140 CP.2013 = 100 Percentage change (in % terms): 12.56% or by 12.56%
