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To convert money spent on the basket into an index number, economists choose one year to be the:
ARandom year
BBase year
CFinal year
DMedian year
Answer & Solution
Correct answer: B. Base year
1. An index needs a reference point.
2. The results of a basket calculation can get messy as raw money amounts.
3. Economists arbitrarily choose one year to be the base year.
4. It is the starting point from which we measure changes in prices.
_Source: OpenStax Principles of Macroeconomics for AP Courses 2e (CC BY 4.0), Ch 8 'Inflation'_
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