Which of the following best explains why the chained consumer price index generally results in a lower rate of inflation than the regular consumer price index?
a. The chained index is based on a comprehensive bundle of goods and services, while the regular CPI considers only changes in the prices of food and energy.
b. The chained index makes allowance each month for shifts away from goods that have become relatively more expensive; the regular CPI does not adjust for this factor.
c. The chained consumer price index considers the impact of both rising and falling prices, whereas the regular consumer price index considers only the impact of goods and services with rising prices during the period.
d. The chained consumer price index considers only the prices of goods and services purchased by households, whereas the regular CPI also includes the price changes of investment assets such as stocks and real estate.
B
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Which of the following does a social planner necessarily need to know to restore efficiency in a monopoly market?
A) The monopolist's marginal costs only B) The buyers' demand for a close substitute of the product sold in the market C) The monopolist's marginal revenue and the tax levied on the sale of the good D) The monopolist's marginal costs and the buyers' willingness to pay for the good
Under what circumstances will the residual supply curve for a country be upward sloping?
A) when it does not import any of the good from the rest of the world B) when it imports a small portion of the rest of the world's supply of the good C) when it imports a large portion of the rest of the world's supply of the good D) Either A or B