The Consumer Price Index of a year is 125 with respect to the base year. The representative consumer's basket cost Rs 1,600 in the base year. What does the same basket cost in the current year?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs 2,000
Given:
CPI = 125
Cost of the basket in the base year = Rs 1,600
CPI = cost of the basket in the current year as a percentage of its cost in the base year.
125 = (Current cost ÷ 1,600) × 100
Current cost = 1,600 × 125 ÷ 100 = Rs 2,000
NCERT (2026-27): “2.4 Nominal and Real GDP … CPI is generally expressed in percentage terms. We have two years under consideration – one is the base year, the other is the current year. We calculate the cost of purchase of a given basket of commodities in the base year. We also calculate the cost of purchase of the same basket in the current year. Then we express the latter as a percentage of the former. …” |