1. Measurement of Inflation (80 points)

In Happy land, there are only 4 goods: Cheese, movie, gasoline and popcorn. The following table shows the prices and quantities produced of these goods in 2018, 2019, 2020 and 2021:

		2018	2019	2020	2021
Market Basket Items	# of units	$ per unit	Total cost	$ per unit	Total cost	$ per unit	Total cost	$ per unit	Total cost
Cheese	3	1.75		1.5		1.5		1.65
Movie	2	12		13.5		15		18
Gasoline	10	1.25		1.6		1.8		2
Poporn	50	1		1.05		1.2		1.25
Total

1. Fill in blanks in table (20 points)
2. Using year 2018 as base year, calculate the index number for each year. (20 points)

Year 2018 Index =

Year 2019 Index =

Year 2020 Index =

Year 2021 Index =

1. Calculate inflation rate since previous year based on your calculation from b. (10 points)

Inflation rate of year 2019 =

Inflation rate of year 2020 =

Inflation rate of year 2021 =

1. Using year 2020 as base year, calculate the index number for each year. (20 points)

Year 2018 Index =

Year 2019 Index =

Year 2020 Index =

Year 2021 Index =

1. Calculate inflation rate since previous year based on your calculation from d. (10 points)

Inflation rate of year 2019 =

Inflation rate of year 2020 =

Inflation rate of year 2021 =