Consider the following production data for an economy and answer the below questions:

Year P1 Q1 P2 Q2 P3 Q3

1* 10 100 12 60 4 70

2 11 120 12 65 5 75

3 10.5 125 11 70 4.5 80

a. Calculate nominal GDP for each year.

b. Given that year 1 is the base year, calculate real GDP for each year.

c. Calculate the rate of real economic growth in years 2 and 3.

d. For each year, calculate the GDP deflator.

e. Based on d. calculate the rate of inflation for years 2 and 3.

f. Assume that the CPI basket contains 5Q1, 3Q2 & 1Q3, calculate the cost of the basket in each year.

g. Based on f. construct a CPI using 1 as the index number.

h. Based on g. calculate the rate of inflation for years 2 and 3.