Inflation is an increase in the aggregate level of prices. CPI is used to measure inflation: an increase in percentage change in CPI indicates inflation, a decrease shows deflation. While many advanced countries including the United States and United Kingdom have been experiencing low inflation, many developing economies, e.g., Venezuela, suffer from high inflation. Inflation is used to adjust the nominal value of many important indicators, e.g., interest rates, to "real" value.

Question 1:The table shows the prices of fruit purchased by the typical college student from 2018 to 2020.(Note that a similar problem is shown in the lecture note with a solution)

1.1What is the amount spent each year on the "basket" of fruit with the quantities shown in column 2? (Fill out theyellow partof the table below)

Items Qty. 2018 2019 2020 Price Amount Price Amount Price Amount Spent Spent Spent Apples 8 $0.50 $0.60 $0.80 Bananas 20 $0.20 $0.25 $0.30 Total amount spent Price Index Inflation Rate