What is a quantity index? Provide the formula. Using the data below construct a quantity index across time for year 0 as base year prices. Identify the expenditure in each year, the price index, and the inflation rate from the base year. Base prices Year O quantities Year 1 quantities Year 2 quantities Good 1 p°, = 0.7 %1 q*, = 2x, q', = 2.2x, q', = 2.42x, %3D Good 2 p'2 = 1.05 %2 q'2 = 4x2 q'2 = 4.4x2 q°2 = 4.84x2 %3D

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