If Housing Prices Increase by 25 Percent and the Price

question 1

Multiple Choice

If housing prices increase by 25 percent and the price of all other goods decreases by 22 percent,then

• A) the consumer price index (CPI)would definitely fall during the year in question because housing prices do not constitute the majority of the CPI.
• B) the consumer price index (CPI)would definitely rise during the year in question because housing prices do constitute the majority of the CPI.
• C) the consumer price index (CPI)would rise by about 1.5 percent because housing constitutes about half of the market basket in the CPI.
• D) because housing spending is considered an investment,the producer price index (PPI)but not the consumer price index (CPI)would be the only price index affected by the change.
• E) the consumer price index (CPI)would only be affected in a small way because it includes about 8,000 goods and housing is only one of the 8,000.

---

Definitions:

Speaker Attack

A form of criticism or assault directed towards the person speaking, rather than addressing the argument itself.

Argumentum Ad Hominem

A fallacy in which an argument is rebutted by attacking the character, motive, or other attributes of the person making the argument, rather than addressing the substance of the argument itself.

Argumentum from Authority

A form of argument where something is declared true because it is backed by someone regarded as an authority on the matter.

Health Care Provider

A professional or organization that offers services for the diagnosis, treatment, and prevention of illness or injury.