Question One (25 points)

Use the data below related to price of some goods and services to answer the following requirements:

• 10 units of food, the price of each unit is $24
• Rent of apartment, $1500 per month
• Gasoline, car insurance, and maintenance, $300
• Phone service (basic service plus 10 long-distance calls), $100

In the year following the base year, the survey takers determine that pizzas have risen to $30 each, apartment rent is $1620, gasoline, car insurance, and maintenance have risen to $340, and phone service has dropped in price to $80.

1. Find the CPI in the subsequent year and the rate of inflation between the base year and the subsequent year.{15 points)

The family's nominal income rose by 10 percent between the base year and the subsequent year. Are they worse off or better off in terms of what their income is able to buy?