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The Consumer Price Index is reported monthly by the U.S. Bureau of Labor Statistics. It reports the change in prices for a market basket of goods from one period to another. The index for 2000 was 220.9. By 2014, it increased to 262.500. What was the geometric mean annual increase for the period?

 Jan 28, 2020
 #1
avatar+20254 
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It increased 14 years    from  2000 - 01     01-02     02-03     and   03-04    etc ...

 

220.9 (r)^n  = 262.5

r^14  = 262.5/220.9

r^14 = 1.188320507          solve for    r 

 Jan 28, 2020
edited by ElectricPavlov  Jan 28, 2020
 #2
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EP: You made a little typo.

 

262.50 / 220.9 =1.1883205^(1 / 14) =1.012400 - 1 x 100 = 1.24 % per year.

 Jan 28, 2020
 #3
avatar+20254 
+1

You are correct.....I used 2004 instead of 2014      yikes !    Thanx...I fixed it !

ElectricPavlov  Jan 28, 2020

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