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1. Calculating inflation using a simple price index Consider a ctional price index, the College Student Price Index (CSPI), based on a typical college student's annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2017, 2018, and 2019. The cost of each item in the basket and the total cost of the basket are shown for 2017. Perform these same calculations for 2018 and 2019, and enter the results in the following table. 20 17 2018 20 19 Price Cost Price Cost Price Cost Qua ntity in Basket (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) Notebooks 10 2 20 1 3 Calculators 1 50 50 54 75 Large coffees 200 1 200 1 1 Energy drinks 100 2 200 3 4 Textbooks 10 100 1,000 120 150 Total cost 1,470 Price index 100 :I |:| Suppose the base year for this price index is 2017. In the last row of the table, calculate and enter the value of the CSPI for the remaining years. Between 2017 and 2018, the CSPI increased by % . Between 2018 and 2019, the CSPI increased by % . Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply. Q As the price of energy drinks increased relative to the price of coffee between 2017 and 2019, students decreased their consumption of energy drinks and increased their consumption of coffee. 0 Professors required each student to buy 10 notebooks, regardless of the price. i] The quality of textbooks increased dramatically from 2017 to 2019, with textbook companies bundling new online study aids with their books, but this quality change is hard to measure. f] A new type of personal transporter, which made it easier to get around places like university campuses, became available for purchase. 2. Alternative price indexes Because there isn't one single measure of inflation, the government and researchers use a variety of methods to get the most balanced picture of how prices fluctuate in the economy. Two of the most commonly used price indexes are the consumer price index (CPI) and the GDP deflator. The GDP deflator for this year is calculated by dividing the using by the using and multiplying by 100. However, the CPI reflects only the prices of all goods and services Indicate whether each scenario will affect the GDP deflator or the CPI for the United States. Check all that apply. Shows up in the... GDP Scenario Deflator CPI An increase in the price of a Japanese-made television that is popular among U.S. consumers O O A decrease in the price of a Waterman Industries deep-water reel, which is a commercial fishing product used for deep-sea O O fishing, made in the U.S., but not bought by U.S. consumers