Table 2.1
-Using Table 2.1, the price index in 1997, using 1977 as the base year, for this basket of goods is:
A) 100.
B) 158.
C) 200.
D) 173.

Question

Table 2.1
-Using Table 2.1, the price index in 1997, using 1977 as the base year, for this basket of goods is:
A) 100. 
B) 158. 
C) 200. 
D) 173.

Quizplus · Accepted Answer

The price index is calculated by taking the cost of the basket of goods in the current year (1997), dividing it by the cost of the same basket in the base year (1977), and then multiplying by 100. If the price index in 1997, using 1977 as the base year, is given as 158, it means that the cost of the basket has increased by 58% from 1977 to 1997.

Table 2.1 -Using Table 2.1, the Price Index in 1997, Using 1977