Question

If the cost of the basket of goods and services the Bureau of Labor Statistics uses to calculate the consumer price index rises from $200 in the base period to $400 in the current period, then the consumer price index:

A. equals 0.5 in the current period.

B. has risen 5% from the base to the current period.

C. equals 50 in the current period.

D. equals 200 in the current period.

E. has risen 200%.

Answer 1

Thw answer of the given statement that "the consumer price index" is E. has risen 200%.

Step-by-step explanation:

The Consumer Price Index (CPI) is calculated using the formula:

`\[ \text{CPI} = \left( \frac{\text{Cost of Basket in Current Period}}{\text{Cost of Basket in Base Period}} \right) * 100 \]`

Given that the cost of the basket of goods and services has risen from $200 in the base period to $400 in the current period, we can substitute these values into the formula:

`\[ \text{CPI} = \left( (400)/(200) \right) * 100 = 200\% \]`

Therefore, the correct answer is E. The Consumer Price Index has risen by 200%, indicating the percentage increase in the cost of the basket of goods and services from the base period to the current period.