If all prices in the economy go up from one year to the next, the CPI index, using the previous year as the base would
A) be less than 100.
B) be greater than 100.
C) not be influenced since quantities have remained unchanged.
D) not be determined since enough information is given.

Question

Quizplus · Accepted Answer

If all prices in the economy go up from one year to the next, the CPI index, using the previous year as the base, would increase. Since CPI is a measure of price levels, an increase in all prices would result in a higher index value, which is greater than 100.

If All Prices in the Economy Go Up from One