Suppose a basket of goods and services has been selected to calculate the consumer price index (CPI) and 2002 has been selected as the base year.In 2002,the basket's cost was $600; in 2004,the basket's cost was $650; and in 2006,the basket's cost was $700.The value of the CPI in 2004 was (round to one decimal place):
A) 92.3.
B) 106.3.
C) 108.3.
D) 152.0.
E) more than 155.0.

Question

Quizplus · Accepted Answer

The CPI is calculated as (Cost in Current Year / Cost in Base Year) x 100. For 2004, it is ($650 / $600) x 100 = 108.3.

Suppose a Basket of Goods and Services Has Been Selected