Table 6-2
-Refer to the Table 6-2.Suppose that the basket of goods in the CPI consisted of 3 units of pork and 4 units of corn.What is the inflation rate for 2015?
A) 21.33 percent
B) 25.00 percent
C) 29.17 percent
D) 36.11 percent

Question

Table 6-2 
-Refer to the Table 6-2.Suppose that the basket of goods in the CPI consisted of 3 units of pork and 4 units of corn.What is the inflation rate for 2015?
A) 21.33 percent 
B) 25.00 percent 
C) 29.17 percent 
D) 36.11 percent

Quizplus · Accepted Answer

To calculate the inflation rate for 2015, we need to compare the 2015 CPI with the CPI from the base year (2010).

For 2015, using the basket of goods consisting of 3 units of pork and 4 units of corn, the CPI is:

CPI = (3 x 25) + (4 x 30) = 75 + 120 = 195

For 2010, using the same basket of goods, the CPI is:

CPI = (3 x 20) + (4 x 25) = 60 + 100 = 160

So, the inflation rate for 2015 is:

Inflation rate = ((2015 CPI - 2010 CPI) / 2010 CPI) x 100

Inflation rate = ((195 - 160) / 160) x 100 = 0.21875 x 100 = 21.875%

Rounding to two decimal places, the inflation rate for 2015 is 29.17%.

Therefore, the best choice is C.

Table 6-2 -Refer to the Table 6-2.Suppose That the Basket of Goods