Question

Assume that the current price of a market basket of goods is $2,500 and the base year price of the same market basket is $2,000. The current price index is
A. 2500.
B. 125.
C. 200.
D. 250.

Answer 1

Answer:

The correct answer is B.

Explanation:

Giving the following information:

The current price of a market basket of goods is $2,500 and the base year price of the same market basket is $2,000.

To calculate the price index we need to make a simple division:

Price index= P1/P0

PI= 2,500/2,000= 1.25*100= 125%