Asked by Savannah Pulliam on Jun 15, 2024
Verified
Statement I: The CPI goes up every year;it can never go down.
Statement II: In constructing the Consumer Price Index,the Bureau of Labor Statistics compiles a market basket of hundreds of goods and services that the typical urban family buys in the base year.
A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.
Consumer Price Index
An index that measures the average change in prices paid by consumers for a basket of goods and services over time, often used as an indicator of inflation.
Bureau of Labor Statistics
A U.S. government agency responsible for collecting and analyzing economic data related to labor market activity, working conditions, and price changes in the economy.
Market Basket
A selected collection of goods and services used to track price changes for the purpose of measuring inflation.
- Comprehend the construction and importance of the Consumer Price Index (CPI) and its implications on the economy.
Verified Answer
CM
Colin Matthew DavisJun 22, 2024
Final Answer :
B
Explanation :
Statement I is false because the CPI can decrease in some years, reflecting a period of deflation or decreasing prices. Statement II is true as the Bureau of Labor Statistics indeed compiles a market basket of goods and services for the CPI calculation.
Learning Objectives
- Comprehend the construction and importance of the Consumer Price Index (CPI) and its implications on the economy.