Assume that the current price of a market basket of goods is $2,500 and the base year price of the same market basket is $2,000. The current price index is

A. 2500.

B. 125.

C. 200.

D. 250.

The correct answer is B.

Explanation:

Giving the following information:

The current price of a market basket of goods is $2,500 and the base year price of the same market basket is $2,000.

To calculate the price index we need to make a simple division:

Price index = P1/P0

PI = 2,500/2,000 = 1.25*100 = 125%