7. Suppose that a typical consumer buys the following quantities of three commodities in 1993 and 1994. Commodity Quantity 1993 per Unit Price 1994 per Unit Price Food 5 units $6.00 $5.00 Clothing 2 units $7.00 $9.00 Shelter 3 units $12.00 $19.00 Which of the following can be concluded about the consumer price index (CPI) for this individual from 1993 to 1994? a. It remained unchanged b. It decreased by 25% c. It decreased by 20% d. It increased by 20% e. It increased by 25%
The CPI is an index that is usually calculated by the Bureau of Economic Analysis and Statistics. It looks at the changes in the prices of the average consumer basket.
