Question

The Republic of Bucolia has computed its CPI for three years, using 2016 as the base year: Instructions: Round your answer to two decimal places. 2015 2016 2017 CPI 94 100 92 A gallon of paint in Bucolia cost $15.00 in 2015. What is that price in 2016 dollars

Answer 1

The price in 2016 dollars  is $14.10.

What is CPI?

The consumer price index is used to measure the changes in the price of a basket of good. It is used to measure inflation.

CPI = (cost of basket of goods in current period / cost of basket of goods in base period) x 100

What is the price in 2016 dollars?

The price in 2016 dollars = price in 2015  x (2015 CPI / 100)

= $15 x (94 /100)

= $15 x 0.94

= $14.10

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