The reference base period is 2002.A consumer price index of 122 in 2018 means that
A)prices of consumer goods have more than doubled.
B)the average of the prices paid by urban consumers for a fixed market basket of consumer goods and services was 22 percent higher in 2018 than it was on average during 2002.
C)the market basket of consumer goods that cost $122 in 2002 can be purchased for $100 in 2018.
D)if the price of a good was $100 in 2002, its price in 2018 is $122.
E)prices of consumer goods have gone up by a factor of 12.2.

Question

Quizplus · Accepted Answer

The consumer price index compares the average price of a fixed basket of goods and services in the current year to its average price in a reference period. As the reference base here is 2002, a consumer price index of 122 in 2018 means that prices of goods and services in the basket are, on average, 22% higher in 2018 than they were on average during 2002. Therefore, choice (B) is the correct answer. The other choices are incorrect because they misinterpret the meaning of the consumer price index.

The Reference Base Period Is 2002