A small nation of 10 people idolizes the TV show American Idol. All they produce and consume are karaoke machines and CDs, in the following amounts:
Karaoke Machines
CDs
Quantity
Price
Quantity
Price
(Dollars)
(Dollars)
2014 10 40 30 10
2015 12 60 50 12
Using a method similar to that used to calculate the consumer price index, the percentage change in the overall price level is ( ) . (Note: Use 2014 as the base year, and fix the basket at 1 karaoke machine and 3 CDs.)
Using a method similar to that used to calculate the GDP deflator, the percentage change of the overall price level is ( ) . (Note: Again, use 2014 as the base year.)
The inflation rate in 2015 is not the same using the two methods because the ( ) holds the basket of goods and services constant, while the( ) allows it to change.