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**CFA Practice Question**

If the cost of a basket of goods is $125 in 2009, $135 in 2010, and $150 in 2011, assuming 2011 is the base year, the CPI for 2009 is ______.

Correct Answer: 83

The formula for the CPI for a given year is: CPI = cost in a given year/cost in a base year*100. In this case, 125/150*100 = 83.

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**User Contributed Comments**
4

User |
Comment |
---|---|

chbourke |
83 is the index of the CPI and not the % of the year wish is 8.43%. Because the Index for 2010 is 90. |

viannie |
we are measuring CPI WE use CPI as a parameter to measure inflation but in this question, it's only measuring CPI |

DonAnd |
CPI = (Cost of CPI basket @ current-period prices/Cost of CPI basket @ base-period prices)* 100 |

schweitzdm |
Unsure of why this equation was missing from the study notes for this section |