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Question 1 (20 marks] Suppose that the residents of Windhoek spend all of their income on cauliflower, broccoli and carrots. In 2019 they buy 100
Question 1 (20 marks] Suppose that the residents of Windhoek spend all of their income on cauliflower, broccoli and carrots. In 2019 they buy 100 heads of cauliflower for N$ 2000, 50 bunches of broccoli for N$750 and 500 carrots for N$500. In 2020 they buy 75 heads of Cauliflower for N$2250, 80 bunches of broccoli for N$1200 and 500 carrots for N$1000. Suppose that the base year is 2019. (a) What is the CPI in both years? (8) (b) What is the inflation rate? (4) (c) Find nominal growth rate between 2019 and 2020. (2) (d) Find real growth rate (2) (e) Which do you think has a greater effect on the CPI:a 10 percent increase in the price of chicken or a 10 percent increase in the price of cars? Why
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