Problems for Chapter 111. The residents ofVegopia spend all of their income on cauliflower, broccoli, and carrots. In2010, they buy 100 heads of cauliflower for $200, 50 bunches of broccoli for$75, and 500 carrots for $50. In 2011, they buy 75 heads of cauliflower for$225, 80 bunches of broccoli for $120, and 500 carrots for $100.a.   Calculate the price of each vegetable in eachyearb.  Using2010 as the base year, calculate the CPI for each year (use 100 heads ofcauliflower, 50 bunches of broccoli, and 500 carrots as the market basket).c.  Whatis the inflation rate in 2011?2. The governmentmakes cost of living adjustments to Social Security benefits each year inproportion to the increase in the CPI, even though most economists believe thatthe CPI overstates inflation.a.  Ifthe elderly consume the same market basket as other people, does SocialSecurity provide the elderly with an improvement in their standard of livingeach year? Explain.b.  Infact, the elderly consume more healthcare compared to younger people, andhealthcare costs have risen faster than overall inflation. What would you do todetermine whether the elderly are actually better off from year to year?3. Out of each of thefollowing pairs of goods, which is more expensive when the price of the good isexpressed in the value of today’s dollars? You will need to use CPIdata from FRED to answer these questions.  Please show your work.a.  A$0.15 copy of the New York Times in January1970 or a $2.50 copy of the New YorkTimes today (note:  use December 2014CPI data for the CPI “today”).b.  A$1,300 Apple IIc computer in April 1984 or a $1,799 MacBook Pro today. c.  A$305 economy class round trip plane ticket from Los Angeles to New York in July1974 or a $1,286 first class round trip plane ticket from Los Angeles to NewYork today.d.  A$2.48 gallon of milk in July 1991 or a $3.58 gallon of milk today.Problems for Chapter 124. International datashow a positive correlation between income per person and the health of apopulation.a.  Explainhow higher income might cause better health outcomes.b.  Explainhow better health outcomes might cause higher incomes.c.  Howmight the relative importance of your two hypotheses be relevant for publicpolicy?5. International datashow a positive correlation between political stability and economic growth.a.  Throughwhat mechanism could political stability lead to strong economic growth?b.  Throughwhat mechanism could strong economic growth lead to political stability?6. There are manysources of estimates of countries’ real per capita GDP, but the most trustedand commonly used estimates come from the PennWorld Tables.  However,we’ll focus on real GDP per capita for the United States for this problem, whichis available through FRED.a.  Calculatethe annual growth rate of real GDP per capita (percentage change in real GDPper capita compared to the same quarter in the previous year) from the 1stquarter of 1948 to the present.  What isthe average annual growth rate of real GDP per capita since 1948?b.  Whatis the average annual growth rate of real GDP per capita since 2000?