Answer (Choose 1 answer)
In an imaginary economy, consumers buy only apples and peaches. The fixed basket consists of 10 apples and 6 peaches. An apple cost $3 in 2006 and $5.40 in 2007. A peach cost $5 in 2006 and $6 in 2007. Which of the following statements is correct?
A. When 2006 is chosen as the base year, the consumer price index is 90 in 2007.
B. When 2006 is chosen as the base year, the inflation rate is 150 percent in 2007.
C. When 2007 is chosen as the base year, the consumer price index is 100 in 2006.
D. When 2007 is chosen as the base year, the inflation rate is 50 percent in 2007.
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