Question

17) If the CPI basket of goods cost $200 in the reference base period and $450 in a later year, the CPI in the later year equals A) 225. B) 300. C) 250. D) 450. 2016 2017 Item Quantity Price Quantity Price Books 10 $30 8 $50 Pens 20 $1 15 $2

Answer 1

Answer:

A) 225

CPI base year = $200

CPI later year = $450

CPI for the later year = ($450 / $200) x 100 = 225

                                       2016                         2017

Item                       Quantity Price           Quantity Price

Books                         10      $30                  8        $50

Pens                           20        $1                  15         $2

Nominal GDP 2016 = (10 x $30) + ($20 x $1) = $300 + $20 = $320

Nominal GDP 2017 = (8 x $50) + ($15 x $2) = $400 + $30 = $430

Real GDP 2017 using 2016 as base year = (8 x $30) + ($15 x $1) = $240 + $15 = $255