How is the index value calculated using a base period?

The index value is calculated using a base period to allow for meaningful comparisons of price changes over time. The proper formula for calculating the index value is to take the current price, divide it by the price in the base period, and then multiply by 100. This method provides a comparison in terms of a percentage relative to the base period.

By using this formula, if the index value is 100, it indicates that the price has not changed since the base period. If the index value is above 100, it shows an increase in price compared to the base period, and if it is below 100, it indicates a decrease. This calculation is essential for tracking inflation, price changes, or economic performance over time, providing a clear understanding of how current prices relate to historical data.

Other options do not accurately reflect the correct calculation method. They either reverse the relationship between the current price and the base period price or introduce incorrect mathematical operations. Therefore, the first choice correctly embodies the standard method used to compute an index value.