If the price level in any country increases by 15 percent during a year, then the price index for that year will be 85 as compared to the base year.

Question

Quizplus · Accepted Answer

If the price level increases by 15 percent, the price index would be 115 (not 85) as compared to the base year. The formula for price index is (Current Price level/Base Year Price Level) x 100. Therefore, (115/100) x 100 = 115, which represents a 15% increase from the base year.

If the Price Level in Any Country Increases by 15