Which of the Following Best Explains Why the Chained Consumer

question 99

Multiple Choice

Which of the following best explains why the chained consumer price index generally results in a lower rate of inflation than the regular consumer price index?

• A) The chained index is based on a comprehensive bundle of goods and services, while the regular CPI considers only changes in the prices of food and energy.
• B) The chained index makes allowance each month for shifts away from goods that have become relatively more expensive; the regular CPI does not adjust for this factor.
• C) The chained consumer price index considers the impact of both rising and falling prices, whereas the regular consumer price index considers only the impact of goods and services with rising prices during the period.
• D) The chained consumer price index considers only the prices of goods and services purchased by households, whereas the regular CPI also includes the price changes of investment assets such as stocks and real estate.

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