The cost of a nation's market basket in the base year is 1,200$, and the current year's price index equals 125 . What is the cost of the market basket in the current year?

Short Answer

Expert verified

$1500is the cost of the market basket in the current year.

Step by step solution

01

introduction 

A market basket is a collection of consumer products and services whose prices are used to create a consumer value file and calculate living costs.

02

explanation

The cost of the market basket in the current year is,

Now,

Price index = 125and cost of the market in base year = $1200

PriceIndex×costofmarketinbaseyear100=125×1200100=1500

Hence the cost of the market basket in the current year is$1500

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