Question

Suppose that the total expenditures for a typical household in 2000 equaled $5,500 per month, while the cost of purchasing exactly the same items in 2005 was $6,875. If 2000 is the base year, the CPI for the year 2005 equals:

A. 0.80
B. 1.00
C. 1.20
D. 1.25

Answer 1

d. 1.25

Step-by-step explanation:

The consumer price index is a ratio that expresses the increase or decrease of the price of a good or service. Is obtained by the division of the most recent year. between the base year.

Household 2000 --> 5.500

Household 2005 ---> 6.875

CPI = 6875/5500 = 1.25