ECON 203 Lecture 4: Principles of Macroeconomics
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2 Oct 2018
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YEAR |
P of Hot Dogs |
Q of Hot Dogs |
P of Hamburgers |
Q of Hamburgers |
2011 | $1 | 100 | $2 | 50 |
2012 (Base Year) | $2 | 150 | $3 | 100 |
2013 | $3 | 200 | $4 | 150 |
a. Calculate the CPI for 2011 and 2012. Using the CPI, calculate the rate of inflation between 2011 and 2012.
b. Calculate the GDP deflator for 2012 and 2013. Using the GDP deflator, calculate the rate of inflation between 2012 and 2013.
c. Recalculate the inflation rate between 2012 and 2013 using the CPI instead of the GDP deflator. In general, would the two methods yield the same inflation rate? Why?