Suppose we shopped for a basket of goods in Year 1 and it cost $350.Suppose the same basket of goods costs $420 in Year 2.If the CPI in Year 1 is 100,the CPI in Year 2 will be
A)70.
B)80.
C)110.
D)120.
E)170.

Question

Quizplus · Accepted Answer

The CPI in Year 2 is calculated by taking the cost of the basket in Year 2 ($420) divided by the cost in Year 1 ($350) and then multiplying by 100. This results in a CPI of 120.

Suppose We Shopped for a Basket of Goods in Year