if the consumer price index increases from 200 to240 in a one-year period , then the inflation rate is( a ) 16 . 67 percent( b ) 20 percent( c ) 25 percent( ) 40 percent( e ) 140 percent



Answer :

The change in the Consumer Price Index shows that the inflation rate for that one-year period is 20%.

Calculation:

This can be found by the formula:

= (New CPI - Old CPI) / Old CPI x 100%

Solving gives:

= (240 - 200) / 200 x 100%

= 40 / 200 x 100%

= 20%

How is the annual CPI increase determined?

Divide the cost of the market basket in year t by the cost of the identical market basket in the base year to determine the CPI in any given year. The CPI in 1984 was equal to $75 divided by $75 multiplied by 100. The CPI is merely an index value, and the base year index sets it to 100.

The price index formula is what?

Cost of goods or services in the present divided by the cost of goods or services in the past multiplied by 100 equals the consumer price.

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