Suppose an economy produces four goods: apples, beer, cheese, and printers. Only apples, beer, and cheese are bought by a typical consumer. Total production and prices of all goods are given in the following table.

(a) Suppose that the base year is 2010 and the fixed basket is the consumption in 2010. What are the costs of the basket for years 2010 - 2013?

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(b) What are the CPIs for these years? What are the inflation rates based on the CPI?

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(c) What are the nominal and real GDP for each year?

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(c) What are the nominal and real GDP for each year?

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(d) What are the GDP deflators for these years? What are the inflation rates based on the GDP deflator?

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(e) Compare the two series of inflation rates. Explain the differences.

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