Use the table below to answer the following questions.
Table 5.3.1
Suppose a simple economy produces three goods only.The price and output data for two years are shown below.

-Refer to Table 5.3.1.The reference base period is 2002.Which one of the following statements is true?
A)From 2002 to 2017, the cost of the market basket rose by 58 percent.
B)The inflation rate in 2017 is greater than the inflation rate in 2002.
C)It costs 158 times more in 2017 than it does in 2002 to buy the same market basket.
D)The inflation rate in 2002 is greater than the inflation rate in 2017.
E)All prices have risen by the same amount.

Question

Use the table below to answer the following questions.
Table 5.3.1
Suppose a simple economy produces three goods only.The price and output data for two years are shown below.
 
-Refer to Table 5.3.1.The reference base period is 2002.Which one of the following statements is true?
A)From 2002 to 2017, the cost of the market basket rose by 58 percent. 
B)The inflation rate in 2017 is greater than the inflation rate in 2002. 
C)It costs 158 times more in 2017 than it does in 2002 to buy the same market basket. 
D)The inflation rate in 2002 is greater than the inflation rate in 2017. 
E)All prices have risen by the same amount.

Quizplus · Accepted Answer

The correct statement is that from 2002 to 2017, the cost of the market basket rose by 58 percent. This is because the reference base period is 2002, and if the cost of the market basket increased to 158 percent of its 2002 cost by 2017, it means there was a 58 percent increase from the base year (100 percent) to 2017 (158 percent). The other options are incorrect interpretations of inflation rate changes or misinterpretations of the data provided.

Use the Table Below to Answer the Following Questions