A basket of products and services cost $200 in the base year. If the Consumer Price Index (CPI) in the current year is 250, then the cost of the basket in the current year is
A) $125.
B) $250.
C) $450.
D) $500.
E) none of the above answers.

Question

Quizplus · Accepted Answer

Using the formula for CPI:
CPI = (Cost of basket in current year / Cost of basket in base year) x 100
We can rearrange the formula to solve for the cost of the basket in the current year:
Cost of basket in current year = (CPI / 100) x Cost of basket in base year
Plugging in the values given in the problem:
Cost of basket in current year = (250 / 100) x $200 = $500
Therefore, the cost of the basket in the current year is $500, which corresponds to answer choice D.

A Basket of Products and Services Cost $200 in the Base