Given the following data, what was the value of the consumer price index in the base year? Calculate the annual rate of consumer price inflation in 2015 in each of the following situations: b

Economics Jan 26, 2021

Given the following data, what was the value of the consumer price index in the base year? Calculate the annual rate of consumer price inflation in 2015 in each of the following situations:
b. The CPI equals 150 in 2014 and 175 in 2015.

Expert Solution

In the Base Year Consumer Price Index is always equals to 100.

b. Computation of Annual Rate of Consumer Price Inflation in 2015:

Annual Rate of Consumer Price Inflation in 2015 = {CPI (in 2015) - CPI (in 2014)}/ (CPI (in 2014)

= (175 -150) / 150

Annual Rate of Consumer Price Inflation in 2015 = 16.67 %

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