Refer to the information provided in Table 7.5 below to answer the questions that follow.
Table 7.5
-Refer to Table 7.5. Suppose 2015 is the base year. The price index in 2014 is
A) 94.2.
B) 97.4.
C) 106.1.
D) 123.0.

Question

Refer to the information provided in Table 7.5 below to answer the questions that follow.
Table 7.5 
-Refer to Table 7.5. Suppose 2015 is the base year. The price index in 2014 is
A) 94.2. 
B) 97.4. 
C) 106.1. 
D) 123.0.

Quizplus · Accepted Answer

The price index 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 (in this case, 2015), and then multiplying by 100. A price index less than 100 indicates that prices were lower in the given year compared to the base year. Since 2015 is the base year, a price index of 94.2 for 2014 suggests that prices were 94.2% of what they were in 2015, indicating that prices were lower in 2014 compared to the base year.

Refer to the Information Provided in Table 7