Suppose we shopped for a basket of goods in Year 1 and it cost $350. Suppose the same basket of goods adds up to $385 in Year 2. If we use Year 1 as a base year, what would be the Year 2 CPI?
A) 35.
B) 90.
C) 100.
D) 110.
E) 135.

Question

Quizplus · Accepted Answer

The formula for calculating CPI (Consumer Price Index) is:
CPI = (cost of basket in current year/cost of basket in base year) x 100

Using the given values:
CPI = ($385/$350) x 100
CPI = 1.1 x 100
CPI = 110

Therefore, the Year 2 CPI, using Year 1 as a base year, would be 110. Answer choice D is correct.

Suppose We Shopped for a Basket of Goods in Year