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AP® Macroeconomics

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CPI and Purchasing Power

APMACR-KN1CTB

If in 2005, the CPI was $1.25$ then which of the following is true of the purchasing power compared to the base year?

I. In the base year, $\$1$ purchased $\$1$ worth of goods/services.
II. In the year 2005, $\$1$ only had the purchasing power of $\$0.80$.
III. The base year was 2000.

A

I only.

B

I and II only.

C

I and III only.

D

II and III only.

E

I, II, and III.