Your Question:

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 1998 was 210.6. By 2014, it increased to 250.2. What was the geometric mean annual increase for the period?

Step By Step Answers with Explanation

To calculate the geometric mean annual increase in the Consumer Price Index (CPI) for the period from 1998 to 2014, you can follow these steps:

Step 3: Calculate the annual growth rate using the geometric mean formula:

Annual growth rate = (Final CPI / Initial CPI)^(1/n) - 1

Annual growth rate ≈ (1.1876)^(1/16) - 1

Annual growth rate ≈ 1.0186 - 1