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The following two tables are used in all the following questions. Thus, part of the following questions involve determining exactly what you need for each

The following two tables are used in all the following questions. Thus, part of the following questions involve determining exactly what you need for each question. Please assume that for GDP calculations, only two things are produced in this economy: houses (a good) and dog walking (a service). Please ignore coffee for the GDP calculations. Also, assume that 2018 is the base year for GDP calculations. The base year for the CPI is not given.

Year Houses Produced (millions) Average House Price Dogs Walked (millions) Average Dog Walking Fee
2018 1.00 $200,000 1,000 $25.00
2019 1.01 $208,000 1,010 $25.10
Year Nominal price of a cup of coffee CPI CPI Market Basket Nominal interest rate on a car loan
1989 $1.70 180 $28,800 5%
1999 $1.85 200 $32,000 3%
2009 $1.95 220 $35,200 2%
2018 $1.98 245 $39,200 5%
2019 $2.00 250 $40,000 6%

Given the data in these tables, can you compute the value of the market basket in the base year of the CPI?


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