The Following Table Shows the Consumption Categories Used to Compute

question 128

Essay

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."

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Definitions:

Different Times

Refers to distinct points or periods in time, often used in the context of comparing historical periods, events, or personal experiences.

Single Group

A research design involving only one group of participants, without a comparison group.

Cross-sectional Study

A research method that analyzes data from a population, or a representative subset, at a specific point in time.

Longitudinal Study

A research approach that follows subjects over a period of time, observing changes and development.