price of a basket of goods in 2000 was $500 dollars. Connect e I https/ mi?retur

Question

price of a basket of goods in 2000 was $500 dollars. Connect e I https/ mi?returrurla https%3A%2p%2Fconnect Help Seve & Exilt Sub 1 S18 me same oasket cost ybuu in 2002, 1oentiry tne correct statement ine price or a pasket or gooas from the folowing in 2uuu was Sbou 62 Mutiple Choice the price index in 2002 must have been 100 points higher than in 2000 The price nciease betwlees 2000 and 2002 was 10 s considered the base year then the price osx in 2002 mustve been 120 2002 1s conse e the base ear then tre ice index in 20comustees o BackspaceN 6 8 9 0 5 Enter

Explanation / Answer

The price of basket of goods given here is $500 in year 2000 while $600 in the year 2002.

Therefore increase in the price index = 100/500 = 20%

Therefore if the price index in the year 2000 was 100, this means that the price index in the year 2002 would be 20% higher than the index in year 2000. Therefore new index = 120

Therefore C is the correct answer here.

Note that is 2002 price index is 100, then the price index in year 2000 would be 100/1.2 = 83.33 (not 70 )

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