Use the table below to answer questions 20-23

The table below shows the 'hypothetical' basket(s) of consumption goods for a 'typical' Penn State college student for 2016 and 2017.

2016 Basket for 'typical PSU college student '2017 Basket for 'typical PSU college student'

Item Price Quantity Item Price Quantity

Textbooks $100 6 Textbooks $110 6 Rent $750 1 Rent $850 1 PSU sporting events $15 6 PSU sporting events $20 3 Dinners in State College $20 6 Dinners in State College $20 8

Assume 2016 is the base year. The rate of inflation between 2016 and 2017 is _____%.

NOTE: calculate the rate of inflation using price indexes.

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Question 21

3pts

Now update the base year to 2017. The rate of inflation between 2016 and 2017 is now _____%.

NOTE: calculate the rate of inflation using price indexes.

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Question 22

3pts

Which rate of inflation accounts for the substitution bias?

the inflation rate calculated using 2016 as the base year

the inflation rate calculated using 2017 as the base year

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Question 23

3pts

The 'Chain Weighted' rate of inflation is ___%.