7. (12 points) Suppose the residents of Mediaville spend all of their income on books, CDs, and DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400, and 100 DVDs for $900. In 2010, they buy 360 books for $3,240, 250 CDs for $1,500, and 125 DVDs for $1,250. Assume that the market basket for the CPI is defined in the base year. Show all your work to see how you got your answers.

A. Using 2009 as the base year, what is the CPI in each year?

B. Using 2009 as the base year, what is the inflation rate in 2010?