In year 1 and year 2, two products are produced in a given economy, computers and bread. Suppose that there are no intermediate goods. In year 1, 30 computers are

produced and sold at $1,000 each, and in year 2, 45 computers are sold at $1,200 each. In year 1, $10,000 loaves of bread are sold for $1.00 each, and in year 2, 12,000 loaves of bread are sold for $1.40 each.

(a) Calculate nominal GDP in each year.

(b) Calculate real GDP in each year, and the percentage increase in real GDP from year 1 to year 2 using year 1 as the base year. Next, do the same calculations using the chain-weighting method.

(c) Calculate the implicit GDP price deflator and the percentage inflation rate from year 1 to year 2 using year 1 as the base year. Next, do the same calculations using the chain-weighting method.

(d) Using year 1 as the base year, calculate the CPI in years 1 and 2, and calculate the CPI rate of inflation.