The CPI changes from 100 to 90. This means that:
A)the base year index has been changed to 90.
B)90% of all prices have fallen.
C)consumers now purchased 10% fewer goods due to inflation.
D)there is deflation.

Question

Quizplus · Accepted Answer

The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. A decrease from 100 to 90 indicates that the average price level of the basket has decreased by 10%, which is indicative of deflation, not inflation. Deflation is a decrease in the general price level of goods and services.

The CPI Changes from 100 to 90