Question
The people of Fort Worth buy only juice and cloth. The CPI market basket contains the quantities bought in 2009. The average household spent $60.00
The people of Fort Worth buy only juice and cloth. The CPI market basket contains the quantities bought in 2009. The average household spent $60.00 on juice and $30.00 on cloth in 2009 when the price of juice was $2.00 a bottle and the price of cloth was $5.00 a yard. In the current year, 2010, juice is $4.00 a bottle and cloth is $6.00 a yard. Calculate the CPI and inflation rate in 2010. (Note: use formula for finding CPI = (total spending in current year/total spending in base year) x 100 for inflation use formula for change in CPI = (CPI current year - CPI base year/CPI base year) x 100
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