To better understand how inflation is measured, suppose the prices listed in the table for Problem 8 changed from one year to the next, as shown here. Use the rest of the table to compute the average inflation rate for this hypothetical complete market basket.

Suppose prices changed from one year to the next. Calculate the change in price between last year and this year and then calculate the inflation impact for these price changes.

Instructions: (1) Calculate thepercentage change in price between last year and this year. Round your responses to one decimal place. If you are entering any negative numbers be sure to include anegative sign (-) in front of those numbers (i.e., if the price is falling). Formula: Percentage change in price = (New price - Old price)/Old price 100. (2) Calculate the average inflation impact for each item and the overall average inflation. Round your responsesto one decimal place.

Last Year's Last Year's This Year's This Year's Percentage Quantity Unit Price Annual Item Last Year's Unit Price Annual Item Change in Inflation Item Expenditure Item Weight Expenditure Price Impact (Q) (P) (Q X P) (P) (Q X P) (%) (% change in CPI Coffee 20 pounds per year $7 $140 0.022 $14 $280 Tuition 1 per year 4,000 4,000 0.630 4,500 4,500 Pizza 150 pizzas per year 10 1,500 0.236 12 1,800 Cable TV 1 per month 30 360 0.057 36 432 Vacation 1 vacation per year 350 350 0.055 300 300 Total Expenditure Last Year $ 6,350 Total Expenditure This Year $ 7,312 Average Inflation