In Bovania,cattle Compose 48 Percent of the Consumer Price Index

question 60

Multiple Choice

In Bovania,cattle compose 48 percent of the consumer price index (CPI) ,housing composes 32 percent,and entertainment accounts for the remaining 20 percent.If,in a certain year,the price of cattle rises by 30 percent and the price of housing rises by 25 percent,then

• A) the value of the CPI must rise,no matter what happens to the price of entertainment,because two-thirds of the CPI is more expensive.
• B) the CPI has increased,as long as the price of entertainment does not fall by more than 55 percent.
• C) the CPI has increased,even if the entertainment in the next year is free.
• D) the CPI has decreased if the price of entertainment falls by more than 27.5 percent.
• E) it is not possible to tell what would happen to the CPI because it is certain that the goods included in the CPI must change.

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