The table below shows products purchased by arepresentative household over the years 2022 and 2023:ItemsXYZ2022Price$2$1$3Quantity251215OF SOCI2023Price$2.20$1.10$3.30Quantity281516(a) Calculate the consumer price index (CPI) for the year2022 and 2023, taking 2022 as the base year, anddetermine the inflation rate between 2022 and 2023.(b) Does this inflation rate measure the actual change incost of living encountered by households accurately?SUSSExplain.

Inflation rate refers to the percentage increase within the popular fee degree of products and…

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consumer price index

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The table below shows products purchased by a
representative household over the years 2022 and 2023:
Items
X
Y
Z
2022
Price
$2
$1
$3
Quantity
25
12
15
OF SOCI
2023
Price
$2.20
$1.10
$3.30
Quantity
28
15
16
(a) Calculate the consumer price index (CPI) for the year
2022 and 2023, taking 2022 as the base year, and
determine the inflation rate between 2022 and 2023.
(b) Does this inflation rate measure the actual change in
cost of living encountered by households accurately?
SUSS
Explain.

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Step 3: Explain the inflation rate measure the actual change in cost of living encountered by households.

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