The market basket used to calculate the CPI in Aquilonia is 4 loaves of bread,6 gallons of milk,2 shirts and 2 pants.In 2005,bread cost $1.00 per loaf,milk cost $1.50 per gallon,shirts cost $6.00 each and pants cost $10.00 per pair.In 2006,bread cost $1.50 per loaf,milk cost $2.00 per gallon,shirts cost $7.00 each and pants cost $12.00 per pair.Using 2005 as the base year,what was Aquilonia's inflation rate in 2006?

Question

Quizplus · Accepted Answer

To calculate the inflation rate, we first need to find the total cost of the market basket in each year.

In 2005, the total cost is: 
4 loaves of bread x $1.00 = $4.00 
6 gallons of milk x $1.50 = $9.00 
2 shirts x $6.00 = $12.00 
2 pants x $10.00 = $20.00 
Total cost = $45.00

In 2006, the total cost is: 
4 loaves of bread x $1.50 = $6.00 
6 gallons of milk x $2.00 = $12.00 
2 shirts x $7.00 = $14.00 
2 pants x $12.00 = $24.00 
Total cost = $56.00

To calculate the inflation rate, we use the formula: ((new cost - old cost) / old cost) x 100

((56.00 - 45.00) / 45.00) x 100 = 24.4%

Therefore, the answer is B) 24.4 percent.

The Market Basket Used to Calculate the CPI in Aquilonia