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Answer to Question #26532 in Macroeconomics for Jessica

Question #26532
suppose that the total expenditures for a typical household in 2000 equaled 5500 per month, while the cost of purchasing the exact same items in 2005 was 6875. if 2000 is the base year, the CPI for the year 2005 equals?what is the answer?
Expert's answer
The consumer price index is a ratio of the total basket of the base year, which is estimated in the prices of the current year, the
consumer basket in the base year, which is measured in base year prices.in this
example is the basic 2000 and 2005 - current.

CPI = (cost of purchasing in 2005/cost of purchasing in2000) * 100%

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