If the CPI falls from 142 to 140 between two consecutive years, this implies that prices fell by 2% between those two years.Question 48Answera.Trueb.False

Break Down the Problem

1. Identify the change in the Consumer Price Index (CPI).
2. Determine the percentage change in price based on the CPI values.

Relevant Concepts

1. The CPI is used to measure inflation or deflation.
2. The formula for percentage change is given by:

$\text{Percentage Change} = \left( \frac{\text{New Value} - \text{Old Value}}{\text{Old Value}} \right) \times 100$

Analysis and Detail

1. Identify the Old and New Values:

   • Old Value (CPI) = 142
   • New Value (CPI) = 140

2. Calculate the Percentage Change: $\text{Percentage Change} = \left( \frac{140 - 142}{142} \right) \times 100$ $\text{Percentage Change} = \left( \frac{-2}{142} \right) \times 100 \approx -1.41\%$

Verify and Summarize

• The calculation shows that the prices fell by approximately 1.41%, not 2%.

Final Answer

The statement is b. False. Prices fell by approximately 1.41%, not 2%.