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The cost of a basket of goods in the base year was $200. If the cost in the current year is $250, and the price index in the current year is 125, what was the price index in the base year?

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200

100

answer is B.

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Detailed Solution

Price index in the base year = (Cost in the base year / Cost in the current year) x 100 x (Price index in the current year / 100) Price index in the base year = (200 / 250) x 100 x (125 / 100) = 100

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