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Suppose we shopped for a basket of goods in Year 1 and it cost $350. Suppose...

Suppose we shopped for a basket of goods in Year 1 and it cost $350. Suppose that same basket of goods adds up to $385 in Year 2. If we use Year 1 as a base year, what would be the Year 2 CPI?
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Answer #1

Price in Year 1 is $350

Price in year 2 is $385

CPI= Current year price / Base year price * 100

CPI = 385/350*100

CPI= 110.

Thus the CPI for year 2 is 110

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