ECON1002 Introductory MacroeconomicsTUTORIAL 2(Week 3)READING GUIDE: Review Chapters 3 and 4 of BOF as preparation for this tutorial. KEY CONCEPTS: MEASUREMENT AND MEANING OF THE CPI AND INFLATION;SAVINGS AND WEALTH SELF-REVIEW OF CONCEPTUAL UNDERSTANDING These are to be attempted before the tutorial. They will not normally be covered in the tutorial,maybe, except for a quick review, time permitting. The answers are typically found in thetextbook and lecture notes. 1.What is meant by the distortions in the tax system introduced by inflation? 2.What is the difference between CPI and GDP deflator? 3.What are the problems caused for the measurement of inflation by changes in the qualityof goods and services over time? 4.What are the costs of inflation? Who, if any, benefits from inflation? 5.Distinguish between household savings and national savings. For Australia, what factorshave contributed to a persistent decline in household savings over the past two decades?