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Chapter 35. Inflation, Deflation, and Macro Policy1.Use the following table to create a price index: (LO35-1)Basket of Goods2013201420 Big Mac meals$7.25$7.503 pairs jeans$50.00$55.0015 movie tickets$7.00$7.00a.What is the value of the price index in 2013?b.What is the value of the price index in 2014?c.What is inflation from 2013 to 2014?2.True or false? Inflation, on average, makes people neither richer nor poorer. Therefore it has no cost. Explain. (LO35-2)3.Why do lenders tend to lose out in an unexpected inflation? (LO35-2)4.Under what conditions would lenders not lose out in inflation? (LO35-2)Answers: