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Suppose an economy consumes only two goods: food and entertainment. The following table shows quantities consumed and prices for three years: Year 0 (the base

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Suppose an economy consumes only two goods: food and entertainment. The following table shows quantities consumed and prices for three years: Year 0 (the base year), Year 1, and Year 2. Item Year 0 Year 1 Year 2 Quantity Price Quantity Price Quantity Price (units) ($ (unit) (units) ($ funit) (units) ($ funit) Food 50 5 75 6 80 4 Entertainment 100 12 110 11 l 15 14 a) Compute the CPI in years 1 and 2. Compute ination from year 1 to year 2 based on CPI. b) For Year 0, compute the shares in expenditure of each of the two goods. c) compute ination rates (from year 0 to year 1 and from year I to year 2) based on GDP deator. Present answer with 3 decimals

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