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According to the Bureau of Labor Statistics, the CPI rose 3.8 percent in August of this year compared to a year earlier. Food prices rose 4.6% and clothing prices were up 4.2 percent, while new car prices rose 3.8 percent and medical care was up 3.2 percent.
1. What percentage change in the CPI up until August is accounted for by the changes in the prices of food, medical care and clothing?
2. Given the changes in food, medical care and clothing, by what percentage did the prices of the other items in the CPI basket change?
Write down the budget constraint
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