Question

A basket of goods costs $200 in the base year and $210 just twelve months later. The price index in the second year is __________ ..

Answer 1

105%.

Step-by-step explanation:

Price index = (price of Market Basket of the year of interest / price of the Market Basket of the base year) × 100

Given,

Cost of basket of goods in base year = $200

Cost of basket of goods in year of interest = $210

Price index in year of interest (second year) = (210/200) × 100

= 105%

The price index in the second year is 105%.