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The CPI for Zippa Republic was 111.9 in December 2007, 114.6 in December 2008, and 116.2 in December 2009.
a. What do these numbers tell you about the price level in these three years?
b. Calculate the inflation rates for the years ended December 2008 and December 2009.
c. How did the inflation rate change in 2009?
d. Why might these CPI numbers be biased?
e. How do alternative price indexes help to avoid the bias in the CPI numbers?
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