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:

Aerobic Exercise

Physical exercise of low to high intensity that depends primarily on the aerobic energy-generating process, such as running or cycling.

Lean Body Weight

The weight of the body after the exclusion of body fat; often used in calculating drug dosages and nutritional needs.

Body Fat

The portion of the human body that consists of adipose tissue, serving as energy storage and insulation.

Isotonic Exercise

Exercise that requires the contraction of muscles and the movement of joints, as in weight lifting.