The CPI for 2000 is computed as 100 times the ratio of the price of the market basket in 2000 divided by the price of the market basket in the base year.

Question

Quizplus · Accepted Answer

This is the correct formula for computing the Consumer Price Index (CPI) for a given year, where the market basket represents a selection of goods and services commonly purchased by households. The base year serves as a reference point for comparison, and is assigned a CPI of 100 by definition. The CPI is a widely-used measure of inflation that reflects changes in the cost of living over time.

The CPI for 2000 Is Computed as 100 Times the Ratio