Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) was $1,000 in the base year 2000. The same basket cost $1,100 in 2016 and $1,150 in 2017. Therefore, the rate of inflation between 2016 and 2017 is _____ percent.
A) 4
B) 4.5
C) 5
D) 15

Question

Quizplus · Accepted Answer

The rate of inflation between 2016 and 2017 is calculated by the formula: [(Price in 2017 - Price in 2016) / Price in 2016] * 100. Substituting the given values: [(1150 - 1100) / 1100] * 100 = 4.5%.

Suppose That the Cost of a Representative Basket Used to Calculate