suppose a basket of goods and services has been selected to calculate the cpi and 2012 has been selected as…

suppose a basket of goods and services has been selected to calculate the cpi and 2012 has been selected as the base year. in 2012, the baskets cost was $77, in 2013, the baskets cost was $82, and in 2014, the baskets cost was $90. the value of the cpi in 2014 was _. multiple choice 1 point which of the following changes in the price index produces the greatest rate of inflation: 106 to 112, 112 to 118, or 118 to 124? 106 to 112 112 to 118 118 to 124 all of these changes produce the same rate of inflation.

suppose a basket of goods and services has been selected to calculate the cpi and 2012 has been selected as the base year. in 2012, the baskets cost was $77, in 2013, the baskets cost was $82, and in 2014, the baskets cost was $90. the value of the cpi in 2014 was _. multiple choice 1 point which of the following changes in the price index produces the greatest rate of inflation: 106 to 112, 112 to 118, or 118 to 124? 106 to 112 112 to 118 118 to 124 all of these changes produce the same rate of inflation.

Answer

Explanation:

Step1: Recall inflation - rate formula

The formula for the inflation rate is $\text{Inflation Rate}=\frac{\text{CPI}{t}-\text{CPI}{t - 1}}{\text{CPI}_{t - 1}}\times100%$.

Step2: Calculate inflation rate for 106 to 112

$\text{Inflation Rate}_1=\frac{112 - 106}{106}\times100%=\frac{6}{106}\times100%\approx5.66%$.

Step3: Calculate inflation rate for 112 to 118

$\text{Inflation Rate}_2=\frac{118 - 112}{112}\times100%=\frac{6}{112}\times100%\approx5.36%$.

Step4: Calculate inflation rate for 118 to 124

$\text{Inflation Rate}_3=\frac{124 - 118}{118}\times100%=\frac{6}{118}\times100%\approx5.08%$.

Answer:

The change from 106 to 112 produces the greatest rate of inflation.