Suppose a basket of goods and services has been selected to calculate the CPI and 2014...

Suppose a basket of goods and services has been selected to calculate the CPI and 2014 has been selected as the base year. In 2012, the basket's cost was $50; in 2014, the basket's cost was $52; and in 2016, the basket's cost was $58. The value of the CPI in 2016 was _____?

Expert Solution

CPI for any given year = [(Cost of buying the market bundle in current year) / (Cost of buying the market bundle in base year )] * 100

2014 is the base year in this question.

CPI in 2016 = [(Basket cost in 2016) / (Basket cost in 2014)] * 100

CPI in 2016 = [ 58 / 52 ] * 100

CPI in 2016 = 111.5

Rahul Sunny answered 2 years ago

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