Foundations of Economics (8th Edition)
Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 23, Problem 1MCQ
To determine

To find:

The option that correctly states what is measured by CPI.

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In a simple economy, people consume only two goods: food and clothing. The market basket of goods used to compute the CPI has 50 units of food and 10 units of clothing. Food Clothing Last year's price $4 $8 This year's price $6 $16 a. What are the percentage increases in the price of food and in the price of clothing? b. What is the percentage increase in the CPI? c. Do these price changes affect all consumers to the same extent? Explain
In a simple economy, people consume only two goods: food and clothing. The market basket of goods used to compute the CPI has 40 units of food and 20 units of clothing. Food Clothing Last year's price $10 $ 18 This year's price $14 $21 a) What are the percentage increases in the price of food? Number b) What are the percentage increases in the price of clothing? Number c) What is the percentage increase in the CPI? Number
Which of the following statements about the CPI is​ true? How does the PCEPI differ from the​ CPI? The CPI​ _______.     A. has a bias of approximately 2.0 percentage points a year   B. is a measure of the change in the amount of money that people need to spend to achieve a given standard of living   C. measures all the changes in the cost of living   D. is a relatively useless measure because every year new goods become available and some old goods disappear The PCEPI​ _______.     A. uses the same market basket as the CPI but gives a greater weight to​ sticky-price items   B. introduces even more biases into the inflation rate than the CPI   C. excludes the prices of food and energy   D. uses the prices of goods and services included in the consumption expenditure component of GDP
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