What are the year-2 CPI and the rate of inflation from year 1 to year 2 for a basket of goods that costs $25.00 in year 1 and $2
5.50 in year 2?
2 answers:
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Start by subtracting 3 from both sides to get .
Now multiply both sides by the reciprocal of 3/2, which is 2/3.
On the left, we have x, and on the right, -3(2/3) is -2.
So we have x = -2.