Praxis II: Economics Content Knowledge Exam Prep

Answer - C - In this scenario, all prices in the average consumer’s market basket are doubled.

Key Takeaway: CPI is the term for the economic indicator that measures change in price over time, using a fixed market basket of average services and goods. To calculate the Consumer Price Index (CPI), you need to set up a ratio between the cost of the market basket of goods in the given year to the cost of those same goods in the base year.