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The Formula for Calculating the Percentage Change in Prices Between

question 29

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The formula for calculating the percentage change in prices between any two years is [(CPI in Current Year / CPI in Original Year) × 100] - 100.


Definitions:

Equilibrium Level

The state in an economy or market where supply equals demand, and there is no inherent force to change the price or quantity.

Real Wages

The purchasing power of wages, adjusted for inflation, representing the quantity of goods and services that can be bought.

Consumer Price Index

An index measuring the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Base Year

The year with which other years are compared when an index is constructed: for example, a price index.

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