When computing a price index, the base year is
A) the earliest year for which data are available.
B) the year that is chosen as the point of reference for comparison of prices with other years.
C) the most recent year for which data are available.
D) the most recent year in which the inflation rate was close to zero.

Question

Quizplus · Accepted Answer

The base year is the year that serves as a reference point for comparison of prices with other years when computing a price index. It is chosen because it is considered a representative year, and its value is set at 100 for most price indexes.

When Computing a Price Index, the Base Year Is