If the consumer price index (CPI)was 100 in the period of 1982-1984,then
A) there would be deflation.
B) this period was the base period.
C) this period was characterized by menu costs.
D) this period was economically optimal.
E) this period was inflationary.

Question

Quizplus · Accepted Answer

The period of 1982-1984 was chosen as the base period for calculating the CPI. This means that it was assigned a value of 100, and all subsequent periods are compared to this base period to measure changes in the price level. The fact that the CPI was 100 in this period does not indicate whether there was inflation or deflation, as that depends on the direction of price changes in subsequent periods.

If the Consumer Price Index (CPI)was 100 in the Period