Q 1) The consumer price index (CPI) is a fixed-weight index. It compares the price of a fixed bundle of goods in one year with the price of the same bundle of goods in some base year. Calculate the price index of a bundle containing 100 units of good X, 150 units of good Y, and 25 units of good Z in 2018, 2019, and 2020. Calculate the percentage change in index between 2018 and 2019 and again between 2019 and 2020. What is rate of inflation/deflation between 2019 and 2020?

Good Quantity consumed 2018 prices 2019 prices 2020 prices

X 100 Rs.10.00 Rs.10.50 Rs.10.75

Y 150 Rs.10.50 Rs.20.00 Rs.20.00

Z 25 Rs. 30.00 Rs.30.25 Rs.30.00

Q 2) In each case of following cases, does the increase in prices affect CPI, GDP deflator, or both in Pakistan? Analyze and Justify your answer.

i)The price of imported Belgian chocolate has increased.

ii)The price of imported equipment used in industrial level ice-cream production has increased.

iii) The price of Millat Tractors has increased.