The Steps Involved in Calculating the Consumer Price Index and the Inflation

question 19

Multiple Choice

The steps involved in calculating the consumer price index and the inflation rate, in order, are as follows:

• A)Choose a base year, update the basket, find the prices, estimate the basket's cost, compute the index, and compute the inflation rate.
• B)Choose a base year, fix the basket, find the prices, compute the inflation rate, compute the basket's cost, and compute the index.
• C)Fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index, and compute the inflation rate.
• D)Fix the basket, find the prices, compute the inflation rate, compute the basket's cost, and choose a base year and compute the index.

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Definitions:

Margin Call

A demand by a broker that an investor deposit further cash or securities to cover possible losses.

Initial Margin

The minimum amount of equity required to enter into a position as security for performance, used in futures and margin trading.

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account.

Margin Call

A demand by a broker that an investor deposit additional money or securities to cover possible losses.