For an Imaginary Economy,the Consumer Price Index Was 115

question 51

Multiple Choice

For an imaginary economy,the consumer price index was 115.00 in 2004,126.50 in 2005,and 136.62 in 2006.Which of the following statements is correct?

• A)For this economy,the base year must be 2004.
• B)If the basket of goods that is used to calculate the CPI cost $75.00 in the base year,then that basket of goods cost $115.00 in 2004.
• C)This economy's rate of inflation for 2006 is 10.12 percent.
• D)None of the above is correct.

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Definitions:

Fixed Cost

Costs that do not change with the level of output or sales, such as rent, salaries, and loan payments.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage rate.

Net Profit

The actual profit after working expenses not included in the calculation of gross profit have been paid.

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced or sold.