Question

Suppose a basket of goods and services has been selected to calculate the CPI and Year 1 has been selected as the base year. In Year 1, the basket's cost was $50; in Year 2, the basket's cost was $52; and in Year 3, the basket's cost was $55. The value of the CPI in Year 3 was

Answer 1

Answer:

110

Explanation:

The consumer price index is an index that measures the inflation rate in a country. It tracks changes in prices for a basket of products and services in a country over time. CPI is calculated with a base year as the reference period.

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

consumer price index=cost of the market basket in a given year   x100

                                     cost of a market basket at the base

In this case,

CPI  =  $ 55   x 100

            $ 50

CPI = 1. 1 x 100

CPI =110