Price indexes like the CPI are calculated using a base year.The term 'base year' refers to:
A)the first year that price data are available.
B)any year in which inflation was higher than 5 per cent.
C)the most recent year in which the business cycle hit the trough.
D)an arbitrarily chosen reference year.
E)the year in which inflation was at its minimum.

Question

Quizplus · Accepted Answer

A base year is an arbitrarily chosen reference year used for calculating price indexes like the CPI. It is used as a benchmark against which prices in other years can be compared.

Price Indexes Like the CPI Are Calculated Using a Base