Suppose a typical family in Bananaland consumes only three goods: bananas, sunscreen and gasoline. Each year...

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Question

Answer 1

Answer #1

Cost of basket in 2006 = 1.8*100 + 2.00*50 + 0.8*150 = 400

Cost of basket in 2007 = 2.00*100 + 2.10*50 + 1.0*150 = 455

Cost of basket in 2008 = 2.20*100 + 2.15*50 + 0.9*150 = 462.50

CPI in 2008 = 462.50 / 400 * 100 = 115.625 ~ 115.6 (rounded to one decimal places)

Answer 2

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