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Question 4 [18 marks] Country A produces and consumes only two goods: 2010 2020 Quantity Price ($) Quantity Price ( Tea 400 2 450 5

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Question 4 [18 marks] Country A produces and consumes only two goods: 2010 2020 Quantity Price ($) Quantity Price ( Tea 400 2 450 5 Coffee 400 3 900 5 a) Using 2010 as the base year, compute the following statistics for each year: nominal GDP, real GDP, the GDP deflator, and the CPI. [8 marks] b) By what percentage did prices rise between 2010 and 2020? Compare the answers given by the Laspeyres and Paasche price indexes. Explain the difference [10 marks]

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