If the total expenditures of a typical family equaled $35,000 per year in 2000 and the exact same basket of goods and services cost $40,000 in the year 2005, the family's cost of living:
A) increased by 14 percent.
B) decreased by 12.5 percent.
C) decreased by 14 percent.
D) increased by 12.5 percent.

Question

Quizplus · Accepted Answer

The cost of living increased by 14 percent because the cost of the same basket of goods and services increased from $35,000 to $40,000, a difference of $5,000. This represents a 14 percent increase, calculated as ($5,000/$35,000) * 100 = 14.29%.

If the Total Expenditures of a Typical Family Equaled $35,000