Question 3: Estimating the Cost of Living

Consider an economy producing the following products: bread and cars. Use the information providedin the following table to answer the question below:

Product	Quantity	Base Year Price (2012)	Price (2019)	Price (2020)
Bread	1000	$20.00	$22	$24
Cars	2000	$8.00	$10	$12

Refer to the table above to answer the questions below:

a) Compute the consumer Price Index for years 2019 and 2020 using 2012 as the base year and theconsumption basket that consist of 1000 bread and 2000 cars. You will need to round your answer tothe nearest whole number. (8 marks)

b) Compute the Inflation rate for 2020 (4 marks)