4.

Suppose you find out that the market basket used by the BLS to calculate the CPI are as follows:

2 dozens of eggs

10 gallons of gasoline

3 loaves of bread

Suppose that the prices of each good are as follows:

2018

2019

2020

Eggs

$2.00/ dozen

$2.10/ dozen

$2.30/ dozen

Gasoline

$1.79/ gallon

$1.99/ gallon

$2.39/ gallon

Bread

$3.10 per loaf

$3.10 per loaf

$3.50 per loaf

a. Calculate the CPI for 2018, 2019 and 2020, using 2019 as your base year.

b. Calculate the inflation rate in 2018-2019 and 2019-2020.