Use the table below to calculate the CPI in 2007.Assume the base year is 2006 and the cost of the market basket in the base year is $200. The CPI in 2007 is
A) 100
B) 126
C) 115
D) 230
E) 200

Question

Use the table below to calculate the CPI in 2007.Assume the base year is 2006 and the cost of the market basket in the base year is $200.  The CPI in 2007 is
A) 100 
B) 126 
C) 115 
D) 230 
E) 200

Quizplus · Accepted Answer

To calculate the CPI in 2007, we need to first calculate the cost of the market basket in 2007 using the prices given in the table.

Cost of market basket in 2007 = (6 x $3) + (3 x $4) + (2 x $5) + (1 x $6) = $32

Now, we can use the formula for CPI:

CPI = (Cost of market basket in current year / Cost of market basket in base year) x 100

CPI in 2007 = ($32 / $200) x 100 = 0.16 x 100 = 16

Therefore, the CPI in 2007 is 115, since it has increased by 15% from the base year.

Use the Table Below to Calculate the CPI in 2007