Table 11-6. The table below applies to an economy with only two goods - hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs. $$\begin{array} { l c c }
\hline \text { Year } & \text { Priee of hamburegers } & \text { Prife of hat doges } \
\hline 2009 & \$ 5.00 & \$ 3.00 \
2010 & 5.50 & 3.30 \
2011 & 5.61 & 3.63 \
\hline
\end{array}$$
-Refer to Table 11-6. If the base year is 2009, then the economy's inflation rate is

Question

Table 11-6. The table below applies to an economy with only two goods - hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs. $$\begin{array} { l c c } 
\hline \text { Year } & \text { Priee of hamburegers } & \text { Prife of hat doges } \
\hline 2009 & \$ 5.00 & \$ 3.00 \
2010 & 5.50 & 3.30 \
2011 & 5.61 & 3.63 \
\hline
\end{array}$$
-Refer to Table 11-6. If the base year is 2009, then the economy's inflation rate is

Quizplus · Accepted Answer

The inflation rate is calculated as the percentage change in the CPI from one period to the next. In this case, the CPI is the cost of the fixed basket of goods. In 2010, the cost of the fixed basket increased from $28.00 to $29.70, an increase of 6%. In 2011, the cost of the fixed basket increased from $29.70 to $31.05, an increase of 4.5%. Therefore, the inflation rate was 6% in 2010 and 4.5% in 2011.

Table 11-6 -Refer to Table 11-6