Which of the Following Is True About the Consumer Price

question 55

Multiple Choice

Which of the following is true about the consumer price index (CPI) and the GDP price index?

• A)Both measures weigh prices by quantities consumed in some base year.
• B)Both yield identical numbers for price level changes for any two years.
• C)Both CPI and GDP price index underestimate changes in the price level in an economy.
• D)The CPI measures changes in relative prices of goods,while the GDP price index measures changes in the absolute price level of a fixed basket of goods and services.
• E)CPI includes products that are widely used,while GDP price index includes all goods and services.

---

Definitions:

Labor Hours

The total number of work hours contributed by employees for productive activities over a specified period.

Inventory Holding Cost

The total cost associated with keeping inventory in stock, including storage, insurance, taxes, depreciation, and opportunity costs.

Forward Buying

A procurement strategy where a company purchases goods in advance to take advantage of favorable pricing or to hedge against future price increases and supply shortages.

Peak Period

Peak period denotes the time of highest demand in a cycle, where operations face maximum stress due to increased consumer activity.