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a typical family on sandy island consumes only juice and cloth. last​ year, which was the base​ year, the family spent ​$ on juice and ​$ on cloth. in the base​ year, juice was ​$ a bottle and cloth was ​$ a length. this​ year, juice is ​$ a bottle and cloth is ​$ a length. calculate a. the cpi basket. b. the cpi in the current year. c. the inflation rate in the current year.

Respuesta :

ahmadfardeen571

The inflation rate is 323.08%

Consumption of juice = (family’s spending) / (base year price)

= $18 / $2

= 9 bottles

Consumption of cloth = (family’s spending) / (base year price)

= $8 / $2  

= 4 units of length

Current period price of the basket = (9 × $10) + (4 × $5) = $110

Base period price of the basket = (9 × $2) + (4 × $2) = $26

Current CPI = {Current period price of the basket / Base period price of the basket} × 100

                     = ($110 / $26) × 100

                     = 423.08 (Answer)

2. Base CPI is assumed to be 100.

Inflation rate in the current year = {(Current CPI – Base CPI) / Base CPI} × 100 = {(423.08 – 100) / 100} × 100

= 323.08

The inflation rate is 323.08%.

Learn more about inflation rate here: https://brainly.com/question/777738

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