GDP and CPI: Tracking the Macroeconomy - End of Chapter Problem The consumer price index, or CPL, measures the cost of living for a typical urban household by multiplying the price for each category of expenditure (housing, food, and so on) by a measure of the importance of that expenditure in the average consumer's market basket and summing overall categories. However, using data from the consumer price index, we can see that changes in the cost of living for different types of consumers can vary a great deal. Let us compare the cost of living for a hypothetical retired person and a hypothetical college student. Let us assume that the market basket of a retired person is allocated in the following way: 10% on housing, 15% on food, 5% on transportation, 60% on medical care, 0% on education, and 10% on recreation. The college student's market basket is allocated as follows: 5% on housing. 15% on food, 20% on transportation, 0% on medical care, 40% on education, and 20% on recreation. The accompanying table shows the August 2019 CPI for each of the relevant catcgories. Calculate the overall CPI for the retired person and for the college student by multiplying the CPI for each of the categories by the relative importance of that category to the individual and then summing each of the categories. The CPI for all items in August 2019 was 158.4. Calculate the overall CPI for the retired person and for the college student by multiplying the CPI for each of the categories by the relative importance of that category to the individual and then summing each of the categories. The CPI for all items in August 2019 was 158.4. Round your answers to fwo places after the decimal. CP1 for the retired person: CPI for the student: How do your calculations of the CPI for the retired person and the college student compare to the overall CPI? The CPI understates the increase in the cost of living for both the retired person and the college student. The CPI overstates the increase in the cost of living for the college student and understates it for the retired person. CPI for the retired person: CPI for the student: How do your calculations of the CPI for the retired person and the college student compare to the overall CPI? The CPI understates the increase in the cost of living for both the retired person and the college student. The CPI overstates the increase in the cost of living for the college student and understates it for the retired person. The CPl overstates the increase in the cost of living for the retired person and undersiates it for the college student. The CPI overstates the increase in the cost of living for both the retired person and the college student