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.

Question

Quizplus · Accepted Answer

To calculate the CPI, we use the formula:

CPI = (Cost of basket in current year / Cost of basket in base year) x 100

Plugging in the numbers:

CPI = (385 / 350) x 100 = 110

Therefore, the Year 2 CPI is 110.

Suppose We Shopped for a Basket of Goods in Year