Answer to Question #289575 in Macroeconomics for GIGIG

Question

You have an economy where only three goods are produced. The data available for 4 years is displayed as follows: Price for Product A (Year 1 / Year 2 / Year 3 / Year 4) - 100 / 105 / 107 / 110, Price for Product B (Year 1 / Year 2 / Year 3 / Year 4) - 35 / 37 / 34 / 30, Price for Product C (Year 1 / Year 2 / Year 3 / Year 4) – 62 / 60 / 63 / 64, Quantity for Product A (Year 1 / Year 2 / Year 3 / Year 4) – 300 / 307 / 318 / 319, Quantity for Product A (Year 1 / Year 2 / Year 3 / Year 4) – 500 / 515 / 525 / 535, Quantity for Product A (Year 1 / Year 2 / Year 3 / Year 4) – 290 / 270 / 278 / 295. Analyze inflation for the entire economy (include all three products in the overall production) using a Paasche index and use year 2 as basis year and year 3 as current year!

Answer 1

Let's solve it in excel