ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -To find the CPI in any year, divide the cost of the market basket in year t by the cost of the same market basket in the base year. The CPI in 1984 = $75/$75 x 100 = 100 The CPI is just an index value and it is indexed to 100 in the base year, in this case 1984. So prices have risen by 28% over that 20 year period.

Detailed explanation-2: -The percentage change can be calculated by dividing the change in index points by the earlier time period price index multiplied by 100. Note that the Change in index points and the Percentage change are different measures of change and are usually different.

Detailed explanation-3: -Use the inflation rate formula Subtract the past date CPI from the current date CPI and divide your answer by the past date CPI. Multiply the results by 100. Your answer is the inflation rate as a percentage.

Detailed explanation-4: -Explanation: Consumer Price Index (CPI) is used to measure changes in the cost of living in which the retail prices of consumer goods and services are obtained. It measures the average changes in the retail prices.