We appreciate your visit to Suppose that 1982 is the base year for the Consumer Price Index CPI and in 2014 the CPI was 190 What does this 190 mean. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
Sure! Let's break down what the Consumer Price Index (CPI) value means in this context.
1. Understanding CPI: The CPI is an index number that represents the average change in prices over time that consumers pay for a basket of goods and services. It is used to measure inflation.
2. Base Year and CPI Value: In our question, 1982 is the base year, and the CPI for that year is typically standardized to a value of 100. This serves as the reference point for future comparisons.
3. CPI in 2014: The question states that in 2014, the CPI was 190. This means that the price level for the basket of goods and services has changed compared to the base year (1982).
4. Interpreting the CPI of 190:
- A CPI of 190 in 2014 tells us that the general price level has increased. Specifically, prices have increased to 190% of what they were in the base year (1982).
- This means that if something cost [tex]$100 in 1982, the cost would have increased to 190% of the original price by 2014.
5. Calculating the Equivalent Cost:
- In 1982, the cost is $[/tex]100.
- By 2014, with a CPI of 190, the cost would be:
[tex]\[
\frac{190}{100} \times 100 = 190
\][/tex]
- Hence, what cost [tex]$100 in 1982, on average, would now cost $[/tex]190 in 2014.
Therefore, the correct interpretation is: What cost [tex]$100 in 1982 on average cost $[/tex]190 in 2014.
1. Understanding CPI: The CPI is an index number that represents the average change in prices over time that consumers pay for a basket of goods and services. It is used to measure inflation.
2. Base Year and CPI Value: In our question, 1982 is the base year, and the CPI for that year is typically standardized to a value of 100. This serves as the reference point for future comparisons.
3. CPI in 2014: The question states that in 2014, the CPI was 190. This means that the price level for the basket of goods and services has changed compared to the base year (1982).
4. Interpreting the CPI of 190:
- A CPI of 190 in 2014 tells us that the general price level has increased. Specifically, prices have increased to 190% of what they were in the base year (1982).
- This means that if something cost [tex]$100 in 1982, the cost would have increased to 190% of the original price by 2014.
5. Calculating the Equivalent Cost:
- In 1982, the cost is $[/tex]100.
- By 2014, with a CPI of 190, the cost would be:
[tex]\[
\frac{190}{100} \times 100 = 190
\][/tex]
- Hence, what cost [tex]$100 in 1982, on average, would now cost $[/tex]190 in 2014.
Therefore, the correct interpretation is: What cost [tex]$100 in 1982 on average cost $[/tex]190 in 2014.
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