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Jane only eats apples. In year 1, red apples cost $1 and green apples $2; Jane buys 8 red apples and 3 green apples. In
Jane only eats apples. In year 1, red apples cost $1 and green apples $2; Jane buys 8 red apples and 3 green apples. In year 2, red apples cost $2 and green ones $1, and Jane buys 7 green apples and 3 red apples. a) Compute the CPI of apples taking year 1 as your base year. b) Compute Jane's nominal expenditure in apples. How did that change between year 1 and 2? 1 c) Compute Jane's real expenditure in apples using year 1 as your base year. How did that change between year 1 and 2? d) Compute the price deflator, defined as the ratio of nominal to real expenditure. How did that change between year 1 and 2
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