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Assume base year's consumption basket costs $1,250 and next year the same consumption basket costs $1,500....

Assume base year's consumption basket costs $1,250 and next year the same consumption basket costs $1,500. If the base year's consumer price index (CPI) is 100, then what is the CPI for next year? Based on the CPI differential of these two year what can you comment on inflation situation from base year to next year?

Review the concerned section of the textbook mention at least two limitation of CPI.

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Answer #1

o ince CPI = Tbasket Cost CBC) Correnteged I Be base Year X100 here bare year is given :.cpl next year next year 11500 - X100

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