1. You will practice the mechanics of CPI calculation in this question. Suppose the typical consumer in the hypothetical country of Cascadia consumes two goods: sandwiches and public transportation.

In an average year, we can assume the typical Cascadian consumer to purchase 1,000 sandwiches and 750 tickets for public transportation (bus, light rail, ferry, streetcar, etc. all taken together.) This is what we call the consumption basket of the typical Cascadian.

The price of a sandwich and the price of public transportation in three consecutive years are as follows in Cascadia:

p2020SANDWICH= $8 per sandwich p2020TICKET = $2.50 per ticket

p2021SANDWICH= $10 per sandwich p2021TICKET = $3.00 per ticket

p2022SANDWICH= $11 per sandwich p2022TICKET= $3.25 per ticket

Given these prices,

First:Calculate the cost of the CPI basket in these three years.

Second:Using 2020 as your base year, calculate the CPI in these three years.

Third:Using the CPI figures from the previous step, calculate the inflation rate in Cascadia between 2020-2021, 2021-2022, and 2020-2022.