a) What does Consumer Price Index do? List three major categories included in the CPI basket. List three problems with the CPL b. Differentiate between the nominal rate of interest and the real rate of interest. Use the equation and numbers to explain. c. List 2 differences between the GDP deflator and the CPI (Consumer Price Index). d. A small nation of ten people idolizes the TV show Canadian Idol. All that the ten people produce and consume are karaoke machines and CDs, in the following amounts: Karaoke Machines CDs Quantity Price Quantity Price
2017 1 $40 3 $10 2018 2 60 5 12 Using a 5 steps method of consumer price index, compute the percentage change in the overall price level from 2017 to 2018. Use 2017 as the base year. Show all your work for full marks.