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A typical family in an island economy consumes only orange, mango, and cloth. The base period is year 1. Prices in the base period are $2 per pound for orange, $3 per pound for mango, and $5 per pound for cloth. The typical family spends $40 on oranges, $45 on mangos, and $25 on clothes. In year 2, oranges cost $3 per pound, mangos cost $3 per pound, and cloth costs $8 per yard. Calculate the economy's Consumer Price Index for year 2 and the inflation rate between year 1 and year 2.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M92001823

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