The CPI is determined by computing:
A. an average of prices of all goods and services.
B. the price of a basket of goods and services that changes every year, relative to the same basket in a base year.
C. the price of a fixed basket of goods and services, relative to the price of the same basket in a base year.
D. nominal GDP relative to real GDP.
Ans: C. the price of a fixed basket of goods and services, relative to the price of the same basket in a base year.
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Government policies intended to increase aggregate spending and output are called ________ policies.
A. expansionary B. aggregate C. fiscal D. monetary
Under a binding price ceiling, what does the change in consumer surplus represent?
A) The gain in surplus for those buyers who can still purchase the product at the lower price. B) The loss in surplus for those buyers who previously purchased some units of the good at the higher price, but these units are no longer produced at the lower price. C) The loss in surplus for those buyers who would like the purchase the excess demand created by the price ceiling policy. D) Both A and B are correct. E) Both A and C are correct.