Economics. Please answer in detail. Thank you! In the city of Pizzaville, govern

Question

Economics. Please answer in detail. Thank you!

In the city of Pizzaville, government survey takers determine that typical family's monthly household budget in the year designated as base year consisted of spending on the following items. 20 pizzas at S10 each Gasoline and car maintenance, S100 Rent of apar ment, S600 per month Phone service, S50 In the year following the base year, the survey takers determine that pizzas have risen to S11 each, apartment rent is $640, gasoline and maintenance has risen to S120 and phone service has dropped in price to $40 (a Find the CPI in each year and the rate ofinflation between the base year and the subsequent year (b) The family's nominal income rose by 5% between the base year and the subsequent year Is the family worse off or better off in terms of what its income is able to buy?

Explanation / Answer

a) CPI = (Cost of CPI market basket at current period prices

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