Practice Quiz

CLEP Principles of Management Exam Prep

Category - Macroeconomics

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In 1996, the “market basket” of services and goods that was used to calculate the CPI cost $200 and the CPI was equal to 100. Let’s imagine that the same basket of goods now costs $300. What is the value of today’s CPI?
  1. 100
  2. 125
  3. 150
  4. 200
Explanation
Answer - C - Given this scenario, the value of today’s CPI is 150.

Key Takeaway: 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 (today) to the cost of those same goods in the base year (1996). Then, you would multiply the result by 100. So for this question:

CPI = 300/200 x 100 = 150
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