-If year 2 is the base year, the price index number for year 3 is:
A) 50.0.
B) 75.0.
C) 125.0.
D) 150.0.

Question

-If year 2 is the base year, the price index number for year 3 is:
A) 50.0. 
B) 75.0. 
C) 125.0. 
D) 150.0.

Quizplus · Accepted Answer

The price index number for a given year is calculated by taking the price of goods in that year, dividing it by the price of the same goods in the base year, and then multiplying by 100. If year 2 is the base year and the price index for year 3 is 125.0, it means that the price of goods in year 3 is 25% higher than in year 2.

-If Year 2 Is the Base Year, the Price Index