Question

Question 9 1 pts Consider the following table: The economy in the base year 2018 produced: Item Coffee Pizza Beer Quantity 20 cups 22 pizzas 40 litres Price $3 per cup $10 per pizza $3 per litre In 2019 the same economy produced: Item Quantity Coffee 24 cups Pizza 25 pizzas Beer 42 litres Price $2 per cup $9 per pizza $3.50 per litre Which of the following is the rate of consumer price inflation and real GDP growth between 2018 and 2019? CPI inflation is -6.25% and real GDP growth is 11.1% CPI inflation is 11.1% and real GDP growth is -6.25% CPI inflation is 12% and real GDP growth is -5.5% CPL inflation is -5.5% and real GDP growth is 12% CPI inflation is -5.5% and real GDP growth is 10%

Answer 1

The correct option is CPI inflation is -5.5% and real GDP is 12%

Real GDP for year 2018 = Quantity₂₀₁₈*Price_​​2018

= (20×3)+(22×10)+(40×3)

= 60+220+120

= 400

Real GDP for 2019 = Quantit₂₀₁₉* Price_​​2019

_{= (24×3)+(25×10)+(42×3)}

_{= 72 + 250+ 126}

₌₄₄₈

_{Growth Rate of real GDP}

_{={ [Real GDP(2019)-Real GDP(2018)]/Real GDP (2018) }*100}

_{= [(448-400)/400]*100}

_{= 12%}

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