QUESTION 2 - Chapter 6 (30 marks)

The consumer price index (CPI) is an economic indicator that is a closely watched by many stakeholders in the economy. Visit the Statistics Canada website (www.statcan.gc.ca) find data on the Consumer Price Index, Annual Average, Not Seasonally Adjusted, and its major components for Canada for the period of 2016 - 2020.

a)[2 marks] Copy the data table from the Website and paste here.

b)[9 marks]Calculate the inflation rate for each of the eight main items between 2019 and 2020 using the formula you have learned in the class (show and explain all your calculations).Which item showed the highest rate of inflation from 2019 to 2020?Which item showed the lowest rate of inflation?Why? Explain your answer. [To find the reason, search Statistics Canada's website where they post the recent CPI figures or use your own observations]

c)[9 marks]Calculate the inflation rate for two special aggregates separately between 2019 and 2020 (show and explain all your calculations). Which of the two aggregates showed the highest rate of inflation? Which item showed the lowest rate of inflation? Why? Explain [The table that you have downloaded from StatCan should include all the 8 regular items and 2 aggregates at the bottom of the table. If NOT, then use the aggregates as All items excluding energy and All items excluding food and energy]

d)[10 marks]Looking at the CPI data for April 2020 and April 2021, explain how CPI and inflation has changed over the year due to COVID-19 pandemic. Explain if you observe any significant changes from April 2020 to April 2021 in the major components of CPI that you have reported above.Explain the detailed economic reasons for changes in 8 main items. [You will require the monthly data for April 2020 and April 2021 for this question]