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6 June, 22:41

A consumer price index of 160 in 1996 with a base year of 1982-1984 would mean that the cost of the market basket

A. rose 60% from the cost of the market basket in the base year.

B. equaled $160 in 1983.

C. equaled $160 in 1996.

D. rose 160% from the cost of the market basket in the base year.

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  1. 6 June, 23:43
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    A. rose 60% from the cost of the market basket in the base year.

    Explanation:

    The base year of 1982-1984 represents a 100 value for the index, and anything above it, is an over 100 value.

    A 60% rise in 12 years (1984 to 1996) represents an average inflation rate of 5% every year, a bit high, but still within a moderate range.

    The formula to find the adjusted consumer price index is:

    Adjusted CPI = (CPIn / CPIb) - 1

    Where:

    CPIn = consumer price index in selected year (in this case 1996)

    CPIb = consumer price index in base year (in this case 1982-1984)
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