Henry is an economist and wants to understand the relationship between inflation and consumer spending habits. For his research, he needs the Consumer Price Index for 2014 and the inflation rate. Based on the prices of goods given,
what will he find to be the CPI and inflation rate for 2014? Assume that a consumer's basket for three consecutive years
consists of the following:
Number of Apples Price of an Orange
Number of Oranges
Year
Price of an Apple
Consumed
Consumed
2012
3
3
2
2013
4
1
2014
5
5
2
Consider 2012 to be the base year.
ОА.
100 CPI, 49.56 percent inflation
OB. 165 CPI, 45.40 percent inflation
Ос.
185 CPI, 55.35 percent inflation
OD
175 CPI, 60.56 percent inflation
OE.
125 CPI, 50.60 percent inflation