How Are the Weights on the Various Goods and Services

question 121

Multiple Choice

How are the weights on the various goods and services in the CPI basket determined?

• A) Each good and service is weighted according to its quantity.
• B) A survey is conducted to determine how much of each good and service typical consumers purchase.
• C) The weights equal the ratio of expenditures on each good or service divided by the total consumption expenditures in the GDP accounts.
• D) Each good and service is weighted according to its price.

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Definitions:

Factory Overhead

The indirect manufacturing costs incurred during the production process, such as utilities, maintenance, and salaried staff.

Wages Payable

The total amount of wages earned by employees that have not yet been paid by the employer.

Wages Expense

The total cost incurred by a business for paying salaries and wages to its employees during a particular period.

Finished Goods

Items that are fully manufactured but have not been sold or dispatched to the final consumer.