Suppose housing constitutes 45% of the typical basket of goods for a typical consumer, education constitutes 3%, and all other goods make up the remaining 52%. Assume the price of housing rises by 4%, the price of education falls by 10%, and prices remain constant for all other goods. Based on the information given, we can definitely say Select one: a.because the price of education fell by more than the price of housing rose, the consumer price index (CPI) must have decreased. b.the CPI is higher than in the previous year. c.if consumers get a 4% pay raise, they are worse off in terms of their real income compared to inflation as measured the CPI.
Suppose housing constitutes 45% of the typical basket of goods for a typical consumer, education constitutes 3%, and all other goods make up the remaining 52%. Assume the
Select one:
a.because the price of education fell by more than the price of housing rose, the
b.the CPI is higher than in the previous year.
c.if consumers get a 4% pay raise, they are worse off in terms of their real income compared to inflation as measured the CPI.
d.because housing is a luxury (as is education), consumers are certainly no worse off in terms of their real wages as measured by the CPI.
e.the CPI is unchanged from the previous year.
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