Suppose total expenditures for a typical household in 2011 were $2,000 per month and that the cost of purchasing exactly the same items in 2012 was $2,500 per month.If 2011 is the base year,the consumer price index (CPI)for 2012 equals
A) 142.
B) 125.
C) 100.
D) 80.
E) 64.

Question

Quizplus · Accepted Answer

The CPI for 2012 is calculated by dividing the cost of the basket in 2012 by the cost in the base year (2011) and then multiplying by 100. So, CPI = ($2,500 / $2,000) * 100 = 125.

Suppose Total Expenditures for a Typical Household in 2011 Were