CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

In a simple economy containing only two goods - apples and shirts - the prices and quantities in the base period and the current period are:

Base Period | Quantity | Price
Apples | 25 | 1.00
Shirts | 5 | 20.00

Current Period | Quantity | Price
Apples | 25 | 1.25
Shirts | 5 | 20.50

Assuming the base period consumer price index (CPI) = 100, the CPI for the current period is closest to ______.
A. 105.60
B. 107.00
C. 109.75
Explanation: The cost of the CPI basket at base period prices is: (25 x $1.00) + (5 x $20.00) = $125. The cost of the CPI basket at current period prices is: (25 x $1.25) + (5 x $20.50) = $133.75. The CPI for the period is ($133.75 / $125) x 100 = 107.

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