"Consumer Price IndexGiven the following data, what was the value of the consumer price index in the base year? Calculate the annual rate of consumer price inflation in 2015 in each of the following situations:a.The CPI equals 200 in 2014 and 240 in 2015.b.The CPI equals 150 in 2014 and 175 in 2015.c.The CPI equals 325 in 2014 and 340 in 2015.d.The CPI equals 325 in 2014 and 315 in 2015.

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A:

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Price Index Analysis

A price index is used to measure inflation in most countries and is focused on a collection of products and services significant to a particular economic segment. It is a measure of changing prices over some time. The price index is a scale or a valuable device to measure changes in price levels. The economists randomly choose a certain year as the base year to convert the amount spent on a basket into a price index.