The following table shows the consumption categories used to compute the consumer price index in a hypothetical economy,their weights as percentages in a typical consumer's total expenditure,and the price ratios relative to the base year.
a)Calculate the consumer price index in Year 1 and Year 2.
b)Calculate the inflation rate in Year 1 and Year 2.
c)Explain how the weights in column 2 were determined.Discuss the meaning of "Price of food."
Definitions:
Memory-Based Judgements
Decisions or evaluations made based on information or experiences stored in memory.
Impressions of People On-Line
The formation of opinions or judgments about people based on their online presence or behavior.
Incoming Data
Information or sets of data that are received by a system or individual, which can then be processed or analyzed.
Regression
Tendency for initial observations of instances from a category to be more extreme than subsequent observations.
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