For an imaginary economy,the consumer price index was 80 in 2014,100 in 2015,and 140 in 2016.Which of the following statements is correct?
A)If the basket of goods that is used to calculate the CPI cost $40 in 2014,then that basket of goods cost $60 in 2015.
B)If the basket of goods that is used to calculate the CPI cost $25 in 2015,then that basket of goods cost $35 in 2016.
C)The overall level of prices increased by 60 percent between 2014 and 2016.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

From 2014 to 2015, there was a 25% increase in the CPI (100/80) and from 2015 to 2016, there was a 40% increase in the CPI (140/100). We cannot calculate the cost of the basket of goods without knowing the weights of the items in the basket. Therefore, option A is incorrect. Option C is incorrect because the overall level of prices increased by 75% (140/80 - 1) between 2014 and 2016. Option D is incorrect because only option B is correct.

For an Imaginary Economy,the Consumer Price Index Was 80 in 2014,100