Suppose that the cost of the CPI basket of goods and services rises from $137 in 2010,which is the base year,to $159 in 2011.The CPI in 2011 is ________ and the inflation rate from 2010 to 2011 is ________.

Question

Quizplus · Accepted Answer

The CPI in 2011 can be calculated as (Cost of basket in 2011/Cost of basket in 2010) x 100.
So, the CPI in 2011 = (159/137) x 100 = 115.9 or approximately 116.
The inflation rate can be calculated as ((CPI in 2011 - CPI in 2010)/CPI in 2010) x 100.
So, the inflation rate from 2010 to 2011 = ((116-100)/100) x 100 = 16 percent.
Therefore, the correct answer is C) 116;22 percent.

Suppose That the Cost of the CPI Basket of Goods