If the CPI Is 100 in the Base Year and 106

question 15

Multiple Choice

If the CPI is 100 in the base year and 106 in the current year,how much did prices rise between the base year and the current year?

• A) 6 percent
• B) 106 percent
• C) 1.06 percent
• D) 0.06 percent
• E) 60 percent

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Definitions:

GDP Deflator

A measure of the level of prices of all new, domestically produced, final goods and services in an economy, used to adjust nominal GDP to calculate real GDP.

Inflation

The acceleration in the general cost levels of goods and services, causing a decline in the ability to acquire.

Real GDP

Real Gross Domestic Product (GDP) measures the value of all final goods and services produced within a country in a given period, adjusted for inflation.

GDP

Gross Domestic Product, the total market value of all final goods and services produced within a country in a given time period.