The consumer price index (CPI)is a measure of the relative cost of goods in the a given country for a particular year.The table below shows the CPI for a country for the stated years beginning in 1940.
Create an appropriate model to re-express the CPI.What re-expression of the CPI does this model involve?
A)-
C)log (CP

Question

The consumer price index (CPI)is a measure of the relative cost of goods in the a given country for a particular year.The table below shows the CPI for a country for the stated years beginning in 1940. 
Create an appropriate model to re-express the CPI.What re-expression of the CPI does this model involve?
A)- 
C)log (CP

Quizplus · Accepted Answer

The best choice for re-expressing the CPI is to take the logarithm of the CPI, as this will allow for a linear relationship with time. Taking the logarithm compresses the scale of the CPI, making it easier to visualize and model changes in the index over a long time period.

The Consumer Price Index (CPI)is a Measure of the Relative