The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Here's how you calculate it:

1. First, you need to find the cost of the market basket in the base year. In this case, it's given as $200 billion.

2. Then, you need to find the cost of the same market basket in the year you're measuring. In this case, it's given as $220 billion.

3. Divide the cost of the market basket in the year you're measuring by the cost in the base year. So, $220 billion / $200 billion = 1.1

4. Multiply this number by 100 to get the CPI. So, 1.1 * 100 = 110

So, the CPI for the economy in year 2 is 110.

Question

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Here's how you calculate it:

1. First, you need to find the cost of the market basket in the base year. In this case, it's given as $200 billion.

2. Then, you need to find the cost of the same market basket in the year you're measuring. In this case, it's given as $220 billion.

3. Divide the cost of the market basket in the year you're measuring by the cost in the base year. So, $220 billion / $200 billion = 1.1

4. Multiply this number by 100 to get the CPI. So, 1.1 * 100 = 110

So, the CPI for the economy in year 2 is 110.

Knowee AI · Accepted Answer

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Here's how you calculate it:

1. First, you need to find the cost of the market basket in the base year. In this case, it's given as $200 billion.

2. Then, you need to find the cost of the same market basket in the year you're measuring. In this case, it's given as $220 billion.

3. Divide the cost of the market basket in the year you're measuring by the cost in the base year. So, $220 billion / $200 billion = 1.1

4. Multiply this number by 100 to get the CPI. So, 1.1 * 100 = 110

So, the CPI for the economy in year 2 is 110.

Suppose the total expenditure for a market basket of goods in year 1(the base year)is $200 billion. In year 2 the expenditure for the same market basket of goods is $220 billion.What is the CPl for the economy in year 2? ○110 ○120 ○90 ○220 ○109

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