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Unformatted text preview: f) Personal Income 208,000 (or consistent with e) + 25,000 = 233,000 g) Gross National Product 295,000 (or consistent with a) – 8,000 = 287,000 3. The value of the services of productive factors (Net Domestic Income) gives a measured of GDP at factor cost, that is, GDP = NDI + Indirect Taxes + Depreciation. 4. CPI = Value of consumption basket in current prices / Value of consumption basket in base year prices, and the value of this consumption basket in Year 1 (base year) prices is 10 x $20 + 2 x $400 + 1 x $40 = $1,040. 2 a) The value of the consumption basket in Year 2 prices is 10 x $21 + 2 x $440 + 1 x $38 = $1,128, and thus the CPI in Year 2 is (1,128 / 1,040) x 100 = 108.5. The rate of inflation in Year 2 is therefore 8.5%. b) The value of the consumption basket in Year 3 prices is 10 x $22 + 2 x $450 + 1 x $40 = $1,160, and thus the CPI in Year 3 is (1,160 / 1,040) x 100 = 111.5. The rate of inflation in Year 3 is [(111.5 – 108.5) / 108.5] x 100 = 2.8%....
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This note was uploaded on 01/16/2011 for the course ECO ECO100 taught by Professor Inheart during the Fall '09 term at University of Toronto.
 Fall '09
 INHEART
 Economics

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