Weekly expenditures for a family of four in 2017 averaged $1,500. In 2018, the cost of the same purchases was $1,600. If 2017 is the base year, what was the CPI in 2018? a. 93 b. 15 c. 100 d. 107

Question

Weekly expenditures for a family of four in 2017 averaged $1,500. In 2018, the cost of the same purchases was$ 1,600. If 2017 is the base year, what was the CPI in 2018?

a. 93

b. 15

c. 100

d. 107

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Solution

The Consumer Price Index (CPI) is calculated by taking the cost of a basket of goods in the current year and dividing it by the cost of the same basket of goods in the base year, then multiplying by 100.

In this case, the cost of the basket of goods in 2018 is $1,600 and the cost in the base year (2017) is$ 1,500.

So, the CPI for 2018 would be calculated as follows:

CPI = ( $1,600 /$ 1,500) * 100

The correct answer is:

d. 107

This problem has been solved

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