Question 1 a. Consider the following data of an economy in a certain year: Item Value($) Private consumption expenditures 1,100 Private investment expenditures 800 Government expenditures 400 Tax revenue 300 Total exports of goods 1,500 Total exports of services 1,200 Total imports of goods 1,900 Total imports of services 700 i What is the Gross Domestic Product (GDP) of this economy? (6 marks) ii What are the national saving and trade balance respectively? (4 marks) iii Suppose the GDP deflator of this economy is 120 in the current year. Calculate the real GDP of this economy. (5 marks) b. Discuss two reasons why the GDP deflator gives a different rate of inflation than the CPI does. (6 marks) c. The Gini coefficient in Hong Kong was 0.525 in 2001 and 0.533 in 2006, explain whether the income inequality of Hong Kong improves or worsens in these few years? (4 marks)