Suppose a consumer buys 20 units of good X and 10 units of good Y every...

Suppose a consumer buys 20 units of good X and 10 units of good Y every year. The following table lists the prices of goods X and Y in the years 2005–2007. Assume that these two goods at the mentioned consumption constitute the typical market basket. Calculate the price indices for these years with 2005 as the base year and complete table. What is the inflation rates for 2006 and 2007? Compared to 2005, was inflation higher in 2006 or 2007?

Year	Good X	Good Y	Cost of Market Basket	Price Index
2005	$3.00	$6.00
2006	$4.00	$7.00
2007	$4.50	$7.50

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Rahul Sunny answered 1 year ago

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