Asked by Muhammad Rameez on Sep 22, 2024
Verified
If the "basket" of goods and services included in the consumer price index (CPI) cost $21,350 in the base year (when the CPI = 100) and currently costs $28,550, what is the current CPI?
A) 133.72
B) 128.63
C) 74.78
D) 125.08
E) 139.77
Consumer Price Index
A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to estimate inflation.
Basket
A collection or group of items or financial assets that are considered as a single unit for purchase, sale, or analysis.
CPI
The Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
- Calculate the CPI and understand its implications on purchasing power and inflation.
Verified Answer
MB
MUHAMMAD BILAL QURESHI6 days ago
Final Answer :
A
Explanation :
The current CPI is calculated by dividing the current cost of the basket by the base year cost and then multiplying by 100. So, CPI=28,55021,350×100=133.72CPI = \frac{28,550}{21,350} \times 100 = 133.72CPI=21,35028,550×100=133.72 .
Learning Objectives
- Calculate the CPI and understand its implications on purchasing power and inflation.