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patriot [66]
3 years ago
10

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion. In year 2, the

total expenditure for the same market basket of goods was $5,500 billion. What was the Consumer Price Index for the economy in year 2
Business
1 answer:
Vitek1552 [10]3 years ago
6 0

Answer:

CPI = 110

Explanation:

The consumer price index(CPI) measures the general change in prices for a basket of goods and services in an economy over time. The basket of goods and services is representative of consumer spending in the economy.

The formula for calculating CPI with a base year is as below.

consumer price index = <u>cost of the market basket in a given year </u>  x100

                                       cost of a market basket at the base

In this case,

CPI  =  $ 5500    x 100

            $ 5000

CPI = 11 x 100

CPI =110

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