CE 07-04

The table below shows the gross domestic product (GDP) statistics of Hong Kong:

(a) The value of A is _______________. (1 mark)

(b) Suppose people did not expect any change in the price level in years 2003 to 2005. Explain whether the following persons would gain or lose when the changes in the price level indicated in the above table occurred.

(i) a retired civil servant who receives a fixed monthly pension from the government. (2 marks)

(ii) a person who borrowed a sum of money in 2003 from a bank at a fixed interest rate and repaid the loan in 2005. (4 marks)