• The Republic of Mauritius is an island nation in the Indian Ocean, located about 2,000 kilometres off the southeast coast of the African continent.
• Since its independence from the U.K. in 1968, Mauritius has developed from a low-income, agriculture-based economy to an upper middle-income diversified economy that is based on tourism, textiles, sugar, and financial services.
• In 2019, the countrys nominal GDP was USD 28.678 trillion.
• The nominal GDP is expected to reach USD 24.345 trillion in 2020.
• In comparison, the real GDP of Mauritius in 2019 stood at USD 21.987 trillion.
• The nations real GDP is then expected to become USD 23.765 trillion in 2020.
• Based on the information presented above, calculate the following macroeconomic indicators for years 2019 and 2020.

1. Calculate the GDP price deflator in years 2019 and 2020. (1 point)

2. Determine the inflation rate based on the changes in the GDP price deflator from year 2019 to year 2020. (1 point)

3. Compute the nominal GDP growth rate from year 2019 to year 2020. (0.5 points)

4. Estimate the real GDP growth rate from year 2019 to year 2020. (0.5 points)

5. Using your answers in part (c) and (d), re-calculate the inflation rate from year 2019 to year 2020. (1 point)

6. Explain why your inflation rate found in part (b) may somewhat differ from the inflation rate in part (e).

Discuss which of the two methods is a superior way of calculating inflation.