Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) is $500 in the base year 2000. Further, suppose that the cost of the same basket is $525 in 2017. The CPI for the base year is _____, and the CPI for 2017 is:
A) 100; 100.
B) 105; 100.
C) 100; 105.
D) 105; 105.

Question

Quizplus · Accepted Answer

The CPI for the base year is always 100. For 2017, the CPI is calculated as ($525/$500) * 100 = 105.

Suppose That the Cost of a Representative Basket Used to Calculate