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You are now required to compute the consumer price index (CPI) and the inflation in one village. To do this task, you go to that village to collect data of households’ consumption in that village. After collecting data, you find that households in this village consume a standard basket of 3kg of rice, 1.5kg of meat and 3kg of vegetable and the prices of these products are given below: a) CPI in Jan 2017, in Feb 2017, and in Mar 2017 by taking Jan 2017 as the base month. b) Inflation rate from Feb to Mar 2017

You are now required to compute the consumer price index (CPI) and the inflation in one village. To do this task, you go to that village to collect data of households’ consumption in that village. After collecting data, you find that households in this village consume a standard basket of 3kg of rice, 1.5kg of meat and 3kg of vegetable and the prices of these products are given below: a) CPI in Jan 2017, in Feb 2017, and in Mar 2017 by taking Jan 2017 as the base month. b) Inflation rate from Feb to Mar 2017

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter22: Inflation
Section: Chapter Questions
Problem 18RQ: What is deflation?
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You are now required to compute the consumer price index (CPI) and the inflation in one 
village. To do this task, you go to that village to collect data of households’ consumption in 
that village. After collecting data, you find that households in this village consume a 
standard basket of 3kg of rice, 1.5kg of meat and 3kg of vegetable and the prices of 
these products are given below:

a) CPI in Jan 2017, in Feb 2017, and in Mar 2017 by taking Jan 2017 as the base 
month.

b) Inflation rate from Feb to Mar 2017

Month Jan 2017 Feb 2017 Mar 2017 Price $0.40 $0.50 $0.60 P Meat $5.50 $5.75 $5.70 P Vegetable $0.20 $0.25 $0.30
Transcribed Image Text:Month Jan 2017 Feb 2017 Mar 2017 Price $0.40 $0.50 $0.60 P Meat $5.50 $5.75 $5.70 P Vegetable $0.20 $0.25 $0.30
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