Suppose you were told that a price index for a specific year was 130.This would mean that?

Question

a. prices are .13 times higher than in the base year.
b. prices are 300 percent higher than in the base year.
c. prices are 130 percent higher than in the base year.
d. prices are 30 percent higher than in the base year.

Answer 1

By convetion, price indexes are scaled to equal 100 in the base year. To work out how much prices have risen between the base year and teh specific year, calculate the percentage growth rate between the two years (ie 30% in this case). Therefore, the answer is D

Answer 2

The answer is D.