Asked by Katherin Mejia on May 22, 2024
Verified
To determine the consumer price index (CPI) ,_____.
A) the values of the current market basket at current and base-year prices need to be known
B) the values of the base-year market basket at current and base-year prices need to be known
C) the values of the current market basket at current prices and the base-year market basket at base-year prices need to be known
D) only the current market basket at base-year prices needs to be known
E) only the current market basket at current prices needs to be known
Consumer Price Index
A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to estimate inflation.
Base-Year Prices
Prices from a specific base year used to express the real value of goods and services in order to remove the effects of inflation over time.
- Comprehend the dynamics and outcomes of inflation and deflation, as reflected through various price indices.
Verified Answer
AP
Avnish PannuMay 28, 2024
Final Answer :
B
Explanation :
The Consumer Price Index (CPI) is calculated by taking the values of the base-year market basket at both current and base-year prices. This allows for a comparison of how much the cost of the same set of goods and services has changed over time, which is essential for measuring inflation.
Learning Objectives
- Comprehend the dynamics and outcomes of inflation and deflation, as reflected through various price indices.