1. a) Given the total consumption expenditure in billions of dollars for the 5 years given, generate a price index with base year as 2005. (5 points)

2003                   740

2004                   850

2005                   920

2006                   1000

2007                   1080

b) Using the above price index, find the inflation rates in years 2004, 2005, 2006 and 2007 (5 points)

c) The nominal GDP for the same years in billions of dollars is given below (5 points)

2003                   850

2004                   970

2005                   1100

2006                   1400

2007                   1700

Find out the real GDP for the above years using the price index constructed in 2a.

d) Find out the nominal and real GDP growth rate. (5 points)

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