The first table below shows the basket of the goods Ann consumes over four time

Question

The first table below shows the basket of the goods Ann consumes over four time periods, T1 to T4. The second table shows Ann's income over the same periods. Assume that Ann consumes the same amount of each good in all time periods. Use the tables to answer the following questions. What was the percentage inflation rate facing Ann for this basket of goods in each of the following time periods? Please give your answer to the nearest whole percentage. What was the percentage change in Ann's real income for the above basket of goods, in each of the following time periods? Please give your answer to the nearest whole percentage.

Explanation / Answer

Inflation:

T1 to T2: 2%

T2 to T3: 16%

T3 to T4: -4%

Real Income:

T1 to T2: 2%

T2 to T3: -3%

T3 to T4: 3%

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