Suppose it costs a family $20,000 to live in 1987 and costs $50,000 to live today.If 1987 was the base year,how much is the CPI today?

Question

Quizplus · Accepted Answer

To calculate CPI, we use the formula: 
CPI = (Cost of basket in current year/cost of basket in base year) x 100 
In this case, the cost of basket in 1987 is $20,000 and the cost of basket in current year is $50,000. 
Therefore, CPI = ($50,000/$20,000) x 100 = 250. 
Hence the correct answer is option C, which is 250.

Suppose It Costs a Family $20,000 to Live in 1987