Suppose a basket of goods and services has been selected to calculate the CPI and 2002 has been chosen as the base year. In 2002, the basket's cost was $75.00; in 2004, the basket's cost was $79.50; and in 2006, the basket's cost was $85.86. The value of the CPI was

Question

Quizplus · Accepted Answer

The CPI in the base year (2002) is always 100. For 2004, CPI = ($79.50/$75.00) * 100 = 106. For 2006, CPI = ($85.86/$75.00) * 100 = 114.48. All statements are correct.

Suppose a Basket of Goods and Services Has Been Selected