Use the table below to answer the following question.

Suppose a simple economy produces three goods only.

The price and output data for some selected years are shown below.

Price

(dollars)

Price

(dollars)

Quantity

(number)

Quantity

(number)

2002

2012

2002

2012

Pop

Crackers

Cucumbers

0.75

1.25

2.00

1.10

2.10

3.00

100

300

200

120

280

190

1) Assume that the reference base year is 2002 (CPI = 100)

a) What is the CPI (consumer price index) in 2012?

b) What is the nominal GDP in 2012?

c) What is the real GDP in 2012?

d) By what percentage did the economy grow between 2002 and 2012?

2) Assume the following information for a country: total population of 35 million; working-age population of 27 million; 10 million are not in the labour force; 15 million are employed; 2 million are unemployed. Calculate the following to two decimal places.

a)What is the unemployment rate?

b)What is the labour force participation rate?

3) Refer to the figure above. The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, what will happen to the economy? Explain your answer.

4) In 2019 the imaginary country of Laffonia had a real GDP of $4.7 billion and a population of 310,000. In 2020 the real GDP was $5.0 billion and the population was 315,000.

What was Laffonia's growth rate in real GDP (per person) between 2019 and 2020? Round off to two decimal places.

5) Calculate the inflation rate experienced in 2014 and 2015 based on the CPI for each year below:

Year

CPI (as of December 31 of the year)

Inflation rate (%)

2013

124.5

Not applicable for 2013

2014

125.2

?

2015

127.5

?