If the value of the consumer price index (CPI)in 2013 was 135 and the value of the CPI in 2012 was 117,we could correctly say that the
A) typical basket of goods was about 18 percent more expensive in 2013 than in 2012.
B) typical basket of goods was about 18 percent less expensive in 2013 than in 2012.
C) typical basket of goods was about 15.4 percent more expensive in 2013 than in 2012.
D) average price of all items included in gross domestic product (GDP)was about 18 percent more expensive in 2013 than in 2012.
E) average price of all items included in gross domestic product (GDP)was about 15.4 percent more expensive in 2013 than in 2012.

Question

Quizplus · Accepted Answer

The percentage increase in the CPI from 2012 to 2013 can be calculated as [(135-117)/117]*100 = 15.38%, which is closest to 15.4%. Therefore, we could correctly say that the typical basket of goods was about 15.4% more expensive in 2013 than in 2012. Choices A and B are incorrect as they suggest a percentage change of 18%, whereas the actual change is slightly lower. Choices D and E are also incorrect as they refer to the average price of all items included in GDP, which is not the same as the CPI.

If the Value of the Consumer Price Index (CPI)in 2013