Question 1

Question 1 (Consumer Price Index) See Table 1 and assume that headsets, controllers and Nintendo switches are the only goods produced in this economy. 2019 2020 2021 Product Quantity Price Quantity Price Quantity Price Headset 10 6 15 5 15 5 Controllers 10 7 3 6 7 Nintendo Switch 6 10 10 9 12 7 a) Using 2019 as the base year, calculate Consumer Price Index for 2020 and 2021. Also Calculate the inflation rate between the two years. b) Using 2020 as the base year, calculate Consumer Price Index for 2020 and 2021. Also Calculate the inflation rate between the two years. c) Using 2021 as the base year, calculate Consumer Price Index for 2020 and 2021. Also Calculate the inflation rate between the two years. d) Why is the inflation rate calculated in a) and b) different? Also, why is there a difference between b) and c)