If the CPI for 2005 was 284.1, and economists predicted an inflation rate of 3.5 per cent for 2006, the predicted CPI at the end of 2006 was:
A) 287.1.
B) 290.1.
C) 297.5.
D) 294.1.

Question

Quizplus · Accepted Answer

The predicted CPI for 2006 can be calculated by increasing the 2005 CPI by 3.5%. This is done by multiplying the 2005 CPI (284.1) by 1.035 (100% + 3.5% = 103.5% = 1.035). So, 284.1 * 1.035 = 294.14435, which rounds to 294.1.

If the CPI for 2005 Was 284