QUESTION 2 - Chapter 6

The consumer price index (CPI) is an economic indicator that is a closely watched by many stakeholders in the economy. Visit the Statistics Canada website (www.statcan.gc.ca) find data on the Consumer Price Index, Annual Average, Not Seasonally Adjusted, and its major components for Canada for the period of 2015 - 2019.

1. Copy and paste the data table at the end of your answer to question 2.

1. Calculate the inflation rate for each of the eight main items between 2018 and 2019 using the formula you have learned in the class (show and explain all your calculations).What item showed the highest rate of inflation from 2018 to 2019?What item showed the lowest rate of inflation?Why? Explain your answer. [To find the reason, search Statistics Canada's website where they post the recent CPI figures or use your own observation of the economy]

1. Calculate the inflation rate for special aggregates separately between 2018 and 2019 (show and explain all your calculations).Which of the two aggregates showed the highest rate of inflation? Which item showed the lowest rate of inflation?Why? Explain [The table that you have downloaded from StatCan should include all the 8 regular items and 2 aggregates]

1. Looking at the most recent numbers of CPI and inflation rate from March and April 2020, explain how CPI and inflation has changed this month due to COVID-19 pandemic. Explain if you observe any significant changes from March 2020 to April 2020 in the major components of CPI that you have reported above.Explain the detailed economic reasons for changes in 8 main items. [Note: you need the separate monthly data for this part of the question.]