Table 24-5
The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys.
-Refer to Table 24-5. If the base year is 2004, then the CPI in 2005 was
A)88.9.
B)90.
C)100.
D)112.5.

Question

Table 24-5
The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. 
-Refer to Table 24-5. If the base year is 2004, then the CPI in 2005 was
A)88.9. 
B)90. 
C)100. 
D)112.5.

Quizplus · Accepted Answer

The CPI in 2005 is calculated by taking the price of the basket of goods in 2005, dividing it by the price of the basket in the base year (2004), and then multiplying by 100. If the CPI is 112.5, it means that the price level increased by 12.5% from the base year.

Table 24-5 The Table Below Pertains to Wrexington, an Economy in Which