A price index is the
A) cost of a market basket of goods today.
B) cost of a market basket of goods and services a year ago expressed as a percentage of the cost of the same market basket today.
C) cost of a market basket of goods and services today expressed as a percentage of the cost of the same market basket during a base year.
D) year that is chosen as the point of reference for comparison of prices in other years.

Question

Quizplus · Accepted Answer

A price index is a measure of the relative cost of a given market basket of goods and services across different periods of time. The most common type of price index compares the cost of the market basket in the current period to the cost of the same basket during a base period, which is set at 100. Therefore, Choice C is the correct answer as it describes a price index as the cost of a market basket of goods and services today expressed as a percentage of the cost of the same market basket during a base year.

A Price Index Is the