Question

Suppose the consumer price index (CPI) stands at 240 this year. If the inflation rate is 5 percent, then next year's CPI will equal:______

a. 245.
b. 250.
c. 252
d. 264.

Answer 1

c. 252

Step-by-step explanation:

Calculation of what the next year's CPI will equal

Using this formula

Next year's CPI=[Consumer price index (CPI) +(Consumer price index (CPI) *Inflation rate

Let plug in the formula

Next year's CPI=[240+(240*5%)]

Next year's CPI=240+12

Next year's CPI=252.

Therefore the next year's CPI will equal 252