Suppose that the residents of Mexico spend all their income on cauliflower, broccoli, and carrots. In 2017 they buy 110 heads of cauliflower for $220, 80 bunches of broccoli for $100, and 200 carrots for $50. In 2018, they by 50 heads of cauliflower for $200, 50 bunches of broccoli for $110, and 250 carrots for $100. Assume the base year is 2017. a)  What is the CPI in both years? Hints: show steps.  b)  What is the inflation rate in 2018? Hints: show steps.

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Chapter5: Measuring A Nation's Income
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Suppose that the residents of Mexico spend all their income on cauliflower, broccoli, and carrots. In 2017 they buy 110 heads of cauliflower for $220, 80 bunches of broccoli for $100, and 200 carrots for $50. In 2018, they by 50 heads of cauliflower for $200, 50 bunches of broccoli for $110, and 250 carrots for $100. Assume the base year is 2017.

  1. a)  What is the CPI in both years? Hints: show steps. 

  2. b)  What is the inflation rate in 2018? Hints: show steps.

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