What's in bold needs to be answered please.

5 . Problems and Applications Q5

Consider the effects of inflation in an economy composed of only two people: Paolo, a bean farmer, and Sharon, a rice farmer. Paolo and Sharon both always consume equal amounts of rice and beans. In 2019 the price of beans was $3, and the price of rice was $1.

Suppose that in 2020 the price of beans was $6 and the price of rice was $2.

Inflation was BLANK%.

Indicate whether Paolo and Sharon were better off, worse off, or unaffected by the changes in prices.

Better Off

Worse Off

Unaffected

Paolo - bubble in which out of three above?

Sharon- bubble in which out of three above?

Now suppose that in 2020 the price of beans was $4.80 and the price of rice was $2.

In this case, inflation was .

Indicate whether Paolo and Sharon were better off, worse off, or unaffected by the changes in prices.

Better Off

Worse Off

Unaffected

Paolo-bubble in which out of three above?

Sharon-bubble in which out of three above?

Now suppose that in 2020, the price of beans was $1.20 and the price of rice was $2.

In this case, inflation was .

Indicate whether Paolo and Sharon were better off, worse off, or unaffected by the changes in prices.

Better Off

Worse Off

Unaffected

Paolo- bubble in which out of three above?

Sharon-bubble in which out of three above?

What matters more to Paolo and Sharon?

The overall inflation rate-A or

The relative price of rice and beans-B