Asked by Bernadine Franklin on Jun 14, 2024
Verified
If a basket of goods cost $630 today when the CPI is at 108.2, then what did the same basket of goods cost 15 years ago when the CPI was as 98.6?
Basket Of Goods
This term refers to a fixed set of consumer products and services valued on a regular basis for the purpose of tracking inflation in an economy.
CPI
The Consumer Price Index, which measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
- Understand the concept of the Consumer Price Index (CPI) and its calculation.
Verified Answer
KB
Karissa BlessJun 20, 2024
Final Answer :
False
Explanation :
The cost of the basket of goods 15 years ago can be calculated using the formula: Cost 15 years ago = (Cost today / CPI today) * CPI 15 years ago. Plugging in the numbers: (630 / 108.2) * 98.6 = 573. Therefore, the basket of goods cost $573 15 years ago, not $630.
Learning Objectives
- Understand the concept of the Consumer Price Index (CPI) and its calculation.