Annual percent change in the Consumer Price Index

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Hello,

Can you please tell me how to solve this question:


The attached graph displays the annual percent change in the Consumer Price Index for urban medical care between the years of 1994 and 2003. Based on the graph, please answer the questions below.

The Consumer Price Index figure for urban medical care for 2003 was _______ the figure for 2000.

Answer Choices: Higher than, lower than, approx. the same


From 1994 to 2003, the Consumer Price Index figure for urban healthcare _______

Answer Choices: increased by more than 20%, increased by less than 20%, decreased by less than 20%, decreased by more than 20%


The Consumer Price Index figure for urban healthcare was highest in _______

Answer Choices: 1994, 2001, 2002, 2003


Thanks a lot,
Sri
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by [email protected] » Mon Apr 28, 2014 1:27 pm
The bar show year-over-year changes. For example, 2000's bar is approximately 4%. This means that the CPI was 4% higher in 2000 than it was in 1999.

1. Between 2000 and 2003, there were two years at ~5% increase and one year at ~4% increase. 2003 is higher than 2000.

2. Since we see positive changes for all years, we can quickly rule out the decrease answers. The annual changes are roughly +4, +3, +3, +3.5, +4, +4, +4, +5, +4. Cumulatively, this is more than 20%

3. Since each year saw positive growth, each year is higher than the previous years. 2003
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by Tushar14 » Thu May 01, 2014 8:25 pm
An increase in CPI-U by a certain fractional amount means an increase by that fractional amount in overall prices within the category like food, clothing etc. Don't get confuse considering Index and Percentage on 'Y' axis. Any +ve increase in % is resulting to increase in Index.

Just consider the annual % increase in CPI as % increase in salary and proceed.So even if you get 3% then 2% and later 1% but overall at last year your salary is higher as compared with the first year.
I hope now options can be selected easily.

None of us would want the salary trend as used in example, but just to explain.