Given a flat 5% per year inflation rate,what would the Consumer Price Index be 3 years after the base year?

Question

Quizplus · Accepted Answer

To calculate the Consumer Price Index (CPI) three years after the base year, we can use the following formula:

CPI year 3 = CPI base year x (1 + inflation rate)^3

CPI year 3 = CPI base year x (1 + 0.05)^3

CPI year 3 = CPI base year x 1.157625

Therefore, if we assume the CPI in the base year is 100, then:

CPI year 3 = 100 x 1.157625 = 115.76

Hence, the answer is A.

Given a Flat 5% Per Year Inflation Rate,what Would the Consumer