Question

Suppose a basket of goods and services has been selected to calculate the cpi and 2014 has been selected as the base year. in 2013, the basket’s cost was $80; in 2014, the basket’s cost was $86; and in 2015, the basket’s cost was $90. the value of the cpi in 2015 was

Answer 1

Consumer Price Index or also most commonly known as CPI is calculated through the equation,
                      CPI = (price at a certain year / price at base year) x 100
Since, we have chosen 2014 as the base year, the denominator of the fraction will be $86. Calculating the CPI for 2015,
                       CPI = ($90/$86) x 100
                              = 104.65