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(Consumer Price Index) Given the following data, what was the value of the consumer price index in the base year? Calculate the annual rate of consumer price inflation in 2004 in each of the following situations:
a. The CPI equals 200 in 2003 and 240 in 2004.
b. The CPI equals 150 in 2003 and 175 in 2004.
c. The CPI equals 325 in 2003 and 340 in 2004.
d. The CPI equals 325 in 2003 and 315 in 2004.
Compare this answer to your answers to parts (a) and (d). What does this example tell you about Laspeyres and Paasche price indexes?
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