The Country of Myrule Has Produced the Following Quantity of Gauges

question 80

Essay

The country of Myrule has produced the following quantity of gauges and potatoes, with the price of each listed in dollar terms: $$\begin{array} { l c c c c } & 2001 && { 2002 } \\\hline \text { Good } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \\\hline \text { Gauges } & 8000 & \$ 4 & 10000 & \$ 3 \\\text { Potatoes } & 6000 & \$ 8 & 5000 & \$ 14 \\\hline\end{array}$$ a. Using a fixed-weight price index, with 2001 as the base year, what are the price indexes for 2001 and 2002? What is the inflation rate using this index? What is the percent change in real output using this index?
b. Using a variable-weight price index, with 2001 as the base year, what are the price indexes for 2001 and 2002. What is the inflation rate using this index? What is the percent change in real output using this index?

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