Asked by
Katelyn Denno
on Oct 13, 2024
Verified
In constructing the consumer price index for the current year
A) the average price of a "bundle" of goods purchased in a base year is divided by the prices of the same bundle that existed during the current year.
B) the average price of a "bundle" of goods purchased during a base year is divided into the price that existed in the current year.
C) the total cost of a "bundle" of goods purchased in a base year is divided by the cost of the same bundle that existed during the current year.
D) the total cost of a "bundle" of goods purchased in a base year is divided into the cost of the same bundle that existed during the current year.
Consumer Price Index
The Consumer Price Index (CPI) measures changes in the price level of a market basket of consumer goods and services purchased by households.
Bundle
A group of products or services sold together as a single package, often offered at a discounted price compared to purchasing each item individually.
Base Year
The base year is a specific year against which economic or financial indices are measured, allowing for comparison across different periods by setting a standard reference point.
- Understand the process involved in calculating the Consumer Price Index (CPI) and its critical role in gauging inflation.
Verified Answer
KY
Learning Objectives
- Understand the process involved in calculating the Consumer Price Index (CPI) and its critical role in gauging inflation.