Question

The table shows the cost of a fixed basket of goods that a typical urban consumer would buy in the economy of Kindleberger. The base period for the consumer price index (CPI) is the year 2000. Please specify answers to two decimal places.

CPI for 2000: ___________
CPI for 2011: ___________
CPI for 2012: ___________

Answer 1

CPI in 2000 = 100

CPI in 2001 = 132.53

CPI in 2002 = 186.14

Step-by-step explanation:

Cost of a basket of goods in the base year (2000) = $4,150.

So, CPI in 2000 = Cost of basket in 2000 * 100 / Cost of basket of goods in base year

= 4150* 100 / 4150

CPI in 2000 = 100

CPI in 2001 = Cost of basket in 2001* 100 / Cost of basket of goods in base year

= 5500 * 100 / 4150

CPI in 2001 = 132.53

CPI in 2002 = Cost of basket in 2001* 100 / Cost of basket of goods in base year

= 7725* 100 / 4150

CPI in 2002 = 186.14