A country consumes only three goods: food, clothing, and housing. In 2005 they bought 200 units of food for $5 each, 150 units of clothing for $20 each and 500 units of housing for $25 each. In 2006, they purchased 250 units of food for $6 each, 160 units of clothing for $22 each and 505 units of housing for $26 each. Calculate the CPI for both years with 2005 as the base year and using that year’s quantities as the CPI basket. 

Answer rating: 100% (QA)

To calculate the Consumer Price Index CPI for both years using 2005 as the base year we need to foll... View the full answer