You know that the consumer price index (CPI)at the beginning of this year was 250 and the rate of inflation was 14%; this would mean the:
A) price of cat food increased by exactly 14%.
B) CPI at the beginning of last year was 215.
C) price of dog food probably fell.
D) CPI at the end of the year was 285.
E) rate of inflation next year will be more than 14%.

Question

Quizplus · Accepted Answer

The CPI at the end of the year can be calculated using the following formula: CPI at the end of the year = CPI at the beginning of the year * (1 + rate of inflation/100). Substituting the given values, we get CPI at the end of the year = 250 * (1 + 14/100) = 285. Therefore, option D is correct. Option A and C are not correct as there is no information given about the prices of cat food or dog food. Option B is also incorrect as there is no information given about the CPI at the beginning of last year. Option E cannot be determined from the given information.

You Know That the Consumer Price Index (CPI)at the Beginning