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Q.1 The table below shows this market basket and the price of each good in 2015...

Q.1 The table below shows this market basket and the price of each good in 2015 and 2016. For the questions below, assume that 2015 is the base year.

2015

2016

Good

Quantity

Unit price

Unit price

Textbooks

7

$180.00

$210.00

Pizza

9

12.00

10.00

Beer

12

10.00

12.00
  1. Compute the CPI in 2016 and the inflation rate between 2015 and 2016.
  1. Suppose in 2016, you buy 10 textbooks instead of 7, will your answers in (a) and (b) change? Explain briefly.
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