Question

A small nation of 10 people idolizes

Answer 1

A small nation of ten people idolizes the TV show The Voice. All they produce and consume are karaoke machines and CDs, in the following amounts:

Karaoke Machines CDs

Quantity Price Quantity Price

2017……….10………..$40………………..30……….$10

2018……….12…………60………………..50…………12

a. Using a method similar to the CPI, compute the percentage change in the overall price level. Use 2017 as the base year and fix the basket at 1 karaoke machine and 3 CDs.

b. Using a method similar to the GDP deflator, compute the percentage change in the