Suppose that in 2006, the CPI was 285, (1982 = 100). This index shows that the real value of a dollar in 2006:
A) has remained essentially unchanged since 1982.
B) is much less than it was in 1982.
C) is 2.85 times as large as it was in 1982.
D) has increased since prices have decreased.

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 CPI of 285 in 2006, with a base year of 1982 (set to 100), indicates that the overall price level has increased by 185% since 1982. This means that the real value of a dollar has decreased, as it now buys much less than it did in 1982, not increased or remained the same.

Suppose That in 2006, the CPI Was 285, (1982 =