Concept explainers
Problems 69-72 require the following discussion. The consumer price index (CPI) indicates the relative change in price over time for a fixed basket of goods and services. It is a cost of living index that helps measure the effect of inflation on the cost of goods and services. The CPI uses the base period 1982-1984 for comparison (the CPI for this period is 100). The CPI for March 2015 was . This means that in the period 1982-1984 had the same purchasing power as in March 2015. In general, if the rate of inflation averages percent per annum over years, then the CPI index after years is where is the CPI index at the beginning of the period.
Source: U.S. Bureau of Labor Statistics
Consumer Price Index The base period for the CPI changed in 1998. Under the previous weight and item structure, the CPI for 1995 was . If the average annual inflation rate was , what year was used as the base period for the CPI?
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