Suppose a basket of goods and services has been selected to calculate the CPI and 2009 has been selected as the base year. In 2007, the basket's cost was $64; in 2009, the basket's cost was $68; and in 2011, the basket's cost was $70. The value of the CPI in 2011 was ...

a. 100.10

b. 97.14

c. 109.38

d. 102.94

Question

Business

Chang

11 September, 07:09

Suppose a basket of goods and services has been selected to calculate the CPI and 2009 has been selected as the base year. In 2007, the basket's cost was $64; in 2009, the basket's cost was $68; and in 2011, the basket's cost was $70. The value of the CPI in 2011 was ...

a. 100.10

b. 97.14

c. 109.38

d. 102.94

+3

Answers (1)

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Virginia · Answer 1

The correct answer is D: 102.92

Explanation:

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

CPI index = (cost of the basket in a given year/cost of the market basket at base) * 100

CPI index = (70/68) * 100 = 102.94