Question 2 (15 Marks) Table below shows the price for basket of two goods, meat and...

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business economics

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Answer 1

Answer #1

A.

Cost of basket for 2017 = (10+12) = 22

Cost of basket for 2018 = (12+15) = 27

Cost of basket for 2019 = (14+18) = 32

B.

CPI for 2017 = (Cost of basket for 2017/Cost of basket for 2017)*100 = 100

CPI for 2018 = (Cost of basket for 2018/Cost of basket for 2017)*100 = (27/22)*100 = 122.73

CPI for 2019 = (Cost of basket for 2019/Cost of basket for 2017)*100 = (32/22)*100 = 145.45

C.

Inflation rate for 2019 = ((CPI for 2019-CPI for 2018)/CPI for 2018)*100

= ((145.45-122.73)/122.73)*100

= 18.51 percent

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Answer 2

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