Question

If the CPI in a given year is 300, this means that: Group of answer choices price have fallen since the base year prices are 200 percent higher than in the base year the economy is experiencing hyper inflation prices are three times higher than the base year

Answer 1

Answer and Explanation:

Given:

Given year CPI₁ = 300

Base year CPI₀ = 100

Computation of inflation rate:

Inflation rate = [(CPI₁ - CPI₀) / CPI₀]100

Inflation rate = [(300 - 100) / 100]100

Inflation rate = [(200) / 100]100

Inflation rate = [2]100

Inflation rate = 200%

Therefore, we say that prices are 200 percent higher than in the base year.