Suppose the CPI was 108 in 1967,and suppose one must spend $936 today to obtain the same basket of goods and services that could be bought for $200 in 1967.Then today's CPI is

Question

Quizplus · Accepted Answer

Using the formula for calculating CPI:
CPI = cost of basket in current year/cost of basket in base year *100

We can plug in the given values:
108 = cost of basket in 1967/cost of basket in 1967 *100
Solving for the cost of basket in 1967, we get:
cost of basket in 1967 = 108/100 * 200 = $216

Now, using the formula for calculating inflation rate:
Inflation rate = (current CPI - base year CPI)/base year CPI * 100

Plugging in the values:
Inflation rate = (936/216 - 1) * 100 = 333.33%

Therefore, today's CPI = base year CPI * (1 + inflation rate/100)
Today's CPI = 200 * (1 + 333.33/100) = 505.44

Hence, the answer is D.

Suppose the CPI Was 108 in 1967,and Suppose One Must