Use the table below to answer the following questions.
Table 21.3.1
Suppose a simple economy produces three goods only.
The price and output data for some selected years are shown below.

-Refer to Table 21.3.1.The reference base period is 2002.Which one of the following statements is true?
A)From 2002 to 2012, the cost of the market basket rose by 58 percent.
B)It costs 158 times more in 2012 than it does in 2002 to buy the same market basket.
C)All prices have risen by the same amount.
D)The inflation rate in 2012 is greater than the inflation rate in 2002.
E)The inflation rate in 2002 is greater than the inflation rate in 2012.

Question

Use the table below to answer the following questions.
Table 21.3.1
Suppose a simple economy produces three goods only.
The price and output data for some selected years are shown below.
 
-Refer to Table 21.3.1.The reference base period is 2002.Which one of the following statements is true?
A)From 2002 to 2012, the cost of the market basket rose by 58 percent. 
B)It costs 158 times more in 2012 than it does in 2002 to buy the same market basket. 
C)All prices have risen by the same amount. 
D)The inflation rate in 2012 is greater than the inflation rate in 2002. 
E)The inflation rate in 2002 is greater than the inflation rate in 2012.

Quizplus · Accepted Answer

The correct statement is that from 2002 to 2012, the cost of the market basket rose by 58 percent. This can be calculated by using the formula for the inflation rate. The inflation rate from 2002 to 2012 is ((158-100)/100) x 100 = 58%. Therefore, option A is the correct answer. Option B is incorrect because it implies a change of 15800%, which is not the case. Option C is incorrect because prices have not risen by the same amount. Option D and E are incorrect because they make assumptions about the inflation rate without any evidence.

Use the Table Below to Answer the Following Questions