Suppose that the consumer price index has a value of 87 (1980 = 100) for 1987. This means that:
A) on average, prices rose by 13 per cent since 1980.
B) all prices fell by 13 per cent since 1980.
C) all prices rose by 87 per cent since 1980.
D) on average, prices fell by 13 per cent since 1980.

Question

Quizplus · Accepted Answer

The consumer price index (CPI) measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households. A CPI of 87 in 1987, with 1980 as the base year (CPI = 100), indicates that, on average, prices have decreased by 13% from the base year to 1987.

Suppose That the Consumer Price Index Has a Value of 87