If the CPI is 120, this means that
A) prices are 20 percent higher than in the reference base period.
B) the inflation rate must be positive.
C) prices are 0.12 times higher than in the reference base period.
D) prices are 120 percent higher than in the reference base period.

Question

Quizplus · Accepted Answer

The CPI measures the average change in prices of goods and services over time, compared to a reference base period. If the CPI is 120, it means that prices have increased by 20% (because 120 is 20% higher than 100) compared to the reference base period. Therefore, choice A is correct.

If the CPI Is 120, This Means That