(Table: The Consumer Price Index) Use Table: The Consumer Price Index. The approximate rate of inflation in year 3 is: Year Consumer Price Index 1 80 2 (base year) 100 3 105 4 125 5 150 20%. 5%. 10%. 19%.
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The table represents the Consumer Price Index for a basket of goods and services for three consecutive years. Calculate the inflation rate for 2014. 2012 (base year) 100 2013 125 2014 180 A. 50 percent B. 55 percent C. 44 percent D. 40 percent
Danielle F.
The consumer price index (CPI) indicates the relative change in price over time for a fixed basket of goods and services. It is a cost-of-living index that helps measure the effect of inflation on the cost of goods and services. The CPI uses the base period 1982–1984 for comparison (the CPI for this period is 100). The CPI for March 2014 was 236.29. This means that $100 in the period 1982–1984 had the same purchasing power as $236.29 in March 2014. In general, if the rate of inflation averages r% per annum over n years, then the CPI index after n years is $$ \mathrm{CPI}=\mathrm{CPI}_{0}\left(1+\frac{r}{100}\right)^{n} $$ where $C P I_{0}$ is the CPI index at the beginning of the n-year period. (a) The CPI was 215.3 for 2008 and 233.0 for 2013. Assuming that annual inflation remained constant for this time period, determine the average annual inflation rate. (b) Using the inflation rate from part (a), in what year will the CPI reach 300?
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Formula Consumer Price Index: CPI = (Price of the Market Basket in Year X) / (Price of the Market Basket in Base Year) x 100 1. Calculate CPI: Year Prices CPI (Base year: 2012) CPI (Base year: 2013) CPI (Base year: 2014) 2012 $20 100 2013 $40 200 2014 $50 250 2. Formula Inflation Rate (Change in Price Level): %Δ PL = (CPI (new) - CPI (old)) / (CPI (old)) x 100 Calculate the rate of inflation between Year 1 and Year 2. The price index (CPI) in Year 1 was 124.0. It was 130.7 in Year 2. If the consumer price index was 170 in one year and 180 in the next year, then the rate of inflation from one year to the next was approximately: A) 5 percent. B) 9 percent. C) 3 percent. D) 2 percent.
Azat N.
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