Suppose a basket of goods and services has been selected to calculate the consumer price index (CPI) and 2002 has been chosen as the base year. In 2002, the basket's cost was $76.00; in 2004, the basket's cost was $79.50; and in 2006, the basket's cost was $85.00. The value of the CPI was:a. no more than 90 in 2001. b. 100 in 2002. c. at least 118 in 2007. d. 108 in 2004. e. 120 in 2006.

Question

Business

Myla Mcgee

27 July, 02:45

Suppose a basket of goods and services has been selected to calculate the consumer price index (CPI) and 2002 has been chosen as the base year. In 2002, the basket's cost was $76.00; in 2004, the basket's cost was $79.50; and in 2006, the basket's cost was $85.00. The value of the CPI was:a. no more than 90 in 2001. b. 100 in 2002. c. at least 118 in 2007. d. 108 in 2004. e. 120 in 2006.

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Answers (1)

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Yusuf French · Answer 1

b. 100 in 2002

Explanation:

This question can be solved without any calculations. When calculating consumer price index, the CPI for the year chosen as base is always 100. In this case, 2002 was chosen as the base year and, therefore, the CPI was 100 in 2002. Since that is one of the alternatives, no further steps are required and the answer is alternative b.