Suppose a basket of goods and services has been selected to calculate the CPI and 2002 has been selected as the base year.In 2002,the basket's cost was $50;in 2004,the basket's cost was $52;and in 2006,the basket's cost was $54.60.The value of the CPI in 2006 was

Question

Quizplus · Accepted Answer

To calculate the CPI, we need to use the following formula:

CPI = (Cost of basket in a given year / Cost of basket in base year) x 100

Using the information given, we can calculate the CPI for 2004 and 2006 as follows:

CPI in 2004 = ($52 / $50) x 100 = 104
CPI in 2006 = ($54.60 / $50) x 100 = 109.2

Therefore, the value of the CPI in 2006 is 109.2, which is option C.

Suppose a Basket of Goods and Services Has Been Selected