A Major Drawback of the Aggregate Price Index Is That

question 49

Multiple Choice

A major drawback of the aggregate price index is that

• A) it does not take into account the fact that some items in the market basket are purchased more frequently than others.
• B) it is difficult to compute.
• C) it is computed by using the values from a single time series or based on a single product.
• D) percentage comparisons cannot be made to the base year.

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Definitions:

Investments Abroad

Allocation of resources by individuals, corporations, or governments in foreign countries for the purpose of acquiring assets or stakes in companies.

Exchange Rate

The value at which the currency of one nation can be converted into the currency of another nation.

Euros

The official currency used by 19 of the 27 European Union countries, known collectively as the Eurozone.

Importer

An individual, company, or entity that buys goods or services from a foreign country for sale within their own country.