Answer to Question #81858 in Macroeconomics for Victor

Question #81858

Year

One Bag of Rice

One Soft Drink

A Loaf of Bread

Total Cost of Bundle

2016

₦5.00

₦8.00

₦3.00

2017

₦5.50

₦8.50

₦3.00

2018

₦6.00

₦8.50

₦3.00

If we select two bags of rice, (a) obtain the total cost of bundle in each period and the price index for 2017 and 2018 respectively taken 2016 as the base year.

b. Obtain the inflation rate for 2017 and 2018.

2. Suppose consumers change their consumption patterns over time in response to relative price changes, what implication does this have for the computation of price index?

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