The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Here's how you calculate it:

1. Find the cost of the market basket of goods in the base year. In this case, it's $200 billion in year 1.

2. Find the cost of the same market basket of goods in the year you are measuring. In this case, it's $220 billion in year 2.

3. Divide the cost of the market basket in the year you are measuring by the cost in the base year. So, $220 billion / $200 billion = 1.1

4. Multiply this number by 100 to get the CPI. So, 1.1 * 100 = 110.

So, the CPI for the economy in year 2 is 110.

Question

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Here's how you calculate it:

1. Find the cost of the market basket of goods in the base year. In this case, it's $200 billion in year 1.

2. Find the cost of the same market basket of goods in the year you are measuring. In this case, it's $220 billion in year 2.

3. Divide the cost of the market basket in the year you are measuring by the cost in the base year. So, $220 billion / $200 billion = 1.1

4. Multiply this number by 100 to get the CPI. So, 1.1 * 100 = 110.

So, the CPI for the economy in year 2 is 110.

Knowee AI · Accepted Answer

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Here's how you calculate it:

1. Find the cost of the market basket of goods in the base year. In this case, it's $200 billion in year 1.

2. Find the cost of the same market basket of goods in the year you are measuring. In this case, it's $220 billion in year 2.

3. Divide the cost of the market basket in the year you are measuring by the cost in the base year. So, $220 billion / $200 billion = 1.1

4. Multiply this number by 100 to get the CPI. So, 1.1 * 100 = 110.

So, the CPI for the economy in year 2 is 110.

Suppose the total expenditure for a market basket of goods in year 1 (the base year) is $200 billion. In year 2 the expenditure for the same market basket of goods is $220 billion. What is the CPI for the economy in year 2?Group of answer choices22090109110120

Question

Solution

Similar Questions

Upgrade your grade with Knowee