The reference base period is 2002.A consumer price index of 122 in 2012 means that
A)prices of consumer goods have gone up by a factor of 12.2.
B)if the price of a good was $100 in 2002, its price in 2012 is $122.
C)prices of consumer goods have more than doubled.
D)the market basket of consumer goods that cost $122 in 2002 can be purchased for $100 in 2012.
E)the average of the prices paid by urban consumers for a fixed market basket of consumer goods and services was 22 percent higher in 2012 than it was on average during 2002.

Question

Quizplus · Accepted Answer

The consumer price index of 122 in 2012 means that the average of the prices paid by urban consumers for a fixed market basket of consumer goods and services was 22 percent higher in 2012 than it was on average during 2002. Therefore, the best choice is E. Choices A, B, C, and D are incorrect as they do not represent the true meaning of the consumer price index of 122 in 2012.

The Reference Base Period Is 2002