Suppose a Basket of Goods and Services Has Been Selected

question 117

Multiple Choice

Suppose a basket of goods and services has been selected to calculate the CPI and 2014 has been selected as the base year.In 2013,the basket's cost was $80;in 2014,the basket's cost was $86;and in 2015,the basket's cost was $90.The value of the CPI in 2015 was

• A)112.5 and the inflation rate was 12.5%.
• B)112.5 and the inflation rate was 4.6%.
• C)104.6 and the inflation rate was 4.6%.
• D)104.6 and the inflation rate was 12.5%.

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Definitions:

Abstraction

The process of removing physical, specific details to focus on ideas or concepts at a more general, simplified level.

Real Thing

An authentic object or concept, as opposed to an imitation or reproduction.

Likert Scale

An interval scale on which respondents record their reactions to statements by checking their level of agreement between, for example, “strongly agree” and “strongly disagree.”

Ordinal

Scales with some measure of progression such as “Freshman, Sophomore, Junior, Senior.”