If the cost of shelter increases by 10 percent, then, other things the same, how much is the CPI likely to increase?

Question

Quizplus · Accepted Answer

Shelter makes up a large portion of the Consumer Price Index (CPI) basket of goods, so a 10 percent increase in shelter costs would have a significant impact on the overall CPI. However, the CPI is not solely based on shelter costs, but also includes other goods and services, so the increase would not be a full 10 percent. Based on historical data, it is estimated that a 10 percent increase in shelter costs would lead to a CPI increase of about 3 percent.

If the Cost of Shelter Increases by 10 Percent, Then