The Table Below Shows the Monthly Inflation Rate Using the CPI

question 236

Multiple Choice

The table below shows the monthly inflation rate using the CPI deflator in 2008.

The data show that

• A) commodity substitution bias occurred in August.
• B) an increase in food and energy prices occurred in July.
• C) cost the CPI basket decreased over the 5- month period.
• D) food and energy prices increased steadily over the period.

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Definitions:

Interest Paid

The amount paid by a borrower to a lender for the privilege of borrowing money, typically expressed as an annual percentage rate.

Effective Interest Rate

The true rate of simple interest.

Contract Interest Rate

The agreed-upon rate of interest that will be charged or paid on a financial contract, such as a loan or bond.

Issued at Discount

When a bond or other security is sold for less than its face value.