Question
Asked Mar 10, 2020
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The table shows the cost of a fixed basket of goods that a typical urban consumer would buy in the economy of Kindleberger. The base period for the consumer price index (CPI) is the year 2000. Please specify answers to two decimal places.

Year Cost of a basket of goods
2000 $5,150.00
2011 $4,500.00
2012 $7,725.00

What is the CPI for 2000?

CPI for 2000:
 
 
What is the CPI for 2011?
CPI for 2011:
 
 
What is the CPI for 2012?
CPI for 2012:
 
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Expert Answer

Step 1

Consumer price index refers to the changes in the price level of consumer goods and services purchased by households.

Step 2

The equation for calculating the consumer price index is given below.

Economics homework question answer, step 2, image 1

Substitute respective values in equation (1) to calculate the consumer price index for different years.

Economics homework question answer, step 2, image 2

The calculated value shows that the consumer price index for the base year is 100.

 

Step 3

The consumer price index for the year 2011 can be calculated as follows.

Economics homework question answer, step 3, image 1

The calculated value shows that the consumer price index of the year 2011 is 87.37.

...

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