Question

The consumption basket used to calculate the consumer price index (CPI) in Bilgitopia includes 20 notebooks, 12 pencils, and 8 erasers. In 2019, one notebook cost 10 TL, one pencil cost 5TL, and one eraser cost 4 TL. In 2020, one notebook cost 15 TL, one pencil cost 2TL, and one eraser cost 4TL. Using 2019 as the base year, what was Bilgitopia's inflation from 2019 to 2020? (by the way, theoretically the inflation rate can sometimes turn out to be negative – this phenomenon is called "deflation")

		-17.98 percent
		21.92 percent
		17.98 percent
		-21.92 percent

Answer 1

Consumption basket includes 20 notebooks, 12 pencils and 8 erasers

CPI in 2019 = Price of notebook in 2019 * Quantity of notebook in 2019 + Price of pencil in 2019 * Quantity of pencil in 2019 + Price of eraser in 2019 * Quantity of eraser in 2019 = 10 * 20 + 5 * 12 + 4 * 8 = 292

CPI in 2020 = Price of notebook in 2020 * Quantity of notebook in 2020 + Price of pencil in 2020 * Quantity of pencil in 2020 + Price of eraser in 2020 * Quantity of eraser in 2020= 15 * 20 + 2 * 12 + 4 * 8 = 356

Inflation rate = [(356 - 292) / 292] * 100 = 21.92%

Option B is correct.