1 Suppose that the cost of a typical basket of goods and ser

1.       Suppose that the cost of a typical basket of goods and services purchased by average U.S. households during1982-84 was $25,000. The cost of the same typical basket in 2009 was $55,000. What was the CPI in 2009?

CPI = 120

CPI = 140

CPI = 160

CPI = 200

CPI = 220

CPI = 240

Solution

CPI inflation is given by the formula

(current cost / base period cost) * 100.Therefore CPI here = (55000 / 25000) * 100 = 220.