Suppose a market basket of goods and services costs $400 in the base year and $500 this year. The consumer price index (CPI) for this year is:
A) 25.
B) 100.
C) 125.
D) 500.

Question

Quizplus · Accepted Answer

- To calculate the CPI, we use the formula:
CPI = (Cost of basket in current year / Cost of basket in base year) x 100
- Plugging in the given values, we get:
CPI = (500/400) x 100 = 125
- Therefore, the answer is Choice C.

Suppose a Market Basket of Goods and Services Costs $400