-Consumers in a Country Buy Only Two Goods, Pens and

question 118

Multiple Choice

$$\begin{array} { l c c c c } { \text { Item } } & \begin{array} { c } \text { Quantity } \\( 2009 ) \end{array} & \begin{array} { c } \text { Price } \\( 2009 ) \end{array} & \begin{array} { c } \text { Quantity } \\( 2010 ) \end{array} & \begin{array} { c } \text { Price } \\\mathbf { ( 2 0 1 0 ) }\end{array} \\\hline \text { Pens } & 400 & \$ 1.00 & 400 & \$ 1.02 \\\text { CDs } & 200 & \$ 15.00 & 200 & \$ 15.90 \\\hline\end{array}$$
-Consumers in a country buy only two goods, pens and CDs.The prices and quantities purchased by urban households are in the table above.The reference base year is 2009.If the current year is 2010, the cost of the CPI market basket in 2010 is

• A) $3,400.
• B) $3,588.
• C) $3,580.
• D) $3,508.
• E) $3,500.

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Definitions:

Present Value

The present worth of a future total amount of money or series of cash inflow, based on a particular return rate.

Lump Sum

A single payment made at a particular time, as opposed to multiple payments made over time.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Discount Rate

The interest rate applied within the framework of discounted cash flow analysis to estimate the present value of future cash inflows.