1. A small nation of ten people produces a consumes Karaoke Machines and CDs in the following amounts: Karaoke Machines CDs Quantity Price Quantity Price 2011 10 $40 30 $10 2012 12 60 50 12 (a) Calculate the CPI in each year, and then use your answer to calculate the inflation rate in 2012. Use 2011 as the base year and fix the basket at 10 karaoke machines and 30 CDs. (b) Calculate the GDP deflator in both years, using 2011 as the base year. Use your answer to calculate the inflation rate in 2012. (c) Is the inflation rate the same using the two methods? Explain why or why not