Find C

Question 5. Inflation A country's consumer basket looks as follows: P 2022 Base year Housing Y 2022 P2021 Y 2021 340 Apparel 11 320 x 10 = 3200 8 55 9 X 53 = 477 Airpods 17 25 Food N/A 0 - to 5.5 110 5 X 108 3 6 7 7 Calculate the Core CPI using 2021 as the base year. (a) Find the weights of the goods. Cove CPI do not add Food Housing = 3200 TO 716 08157 3677 - 0 870 x100-1 87%) 3677 Apparell - 47 7 = = 0, 1 2 9 7 x 10 0 = 12. 97 or 13%/161 Almods = 0 (b) Find the inflation of each individual good base year - year ! Housing = 320- 340 2 - 20 = 0. 0625= 6.25 320 year 1 320 Apparel = 9 - 8 - =- 12- -10.171 1 = 11.1 1x pods = 17-17 =0 17 Food - 5 - 5.S = O . S = 0. 1 S (c) find the core inflation. (d) Looking at the goods in the basket, do you think your result overstates, understates, or gets Inflation just right? Explain. Overstates OUT