If the price of housing (which accounts for 40% of total expenditures in the CPI basket), rises by 5% in one year while the prices of all other goods remain constant, by how much will the CPI rise?

Question

Quizplus · Accepted Answer

The CPI will rise by 2% because housing accounts for 40% of the CPI basket, and a 5% increase in housing prices will contribute 0.05 * 40% = 2% to the overall CPI.

If the Price of Housing (Which Accounts for 40% of Total