Suppose the Value of the CPI Is 1

question 125

Multiple Choice

Suppose the value of the CPI is 1.100 in year one, 1.160 in year two, and 1.270 in year three.Assume also that the price of computers increases by 3% between year one and year two, and by another 3% between year two and year three.The price level is increasing, the inflation rate is _______, and the relative price of computers is _________.

• A)increasing; increasing
• B)constant; increasing
• C)constant; decreasing
• D)increasing; decreasing

---

Definitions:

Pay Differentials

The variations in pay for different jobs or skills within a company or in different geographical locations.

Fair Labor Standards Act

United States federal law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments.

Minimum Wage

The lowest legal hourly pay that employers can compensate workers, established by law to ensure a minimum standard of living for employees.

Overtime Pay

Additional compensation awarded to employees for hours worked beyond the standard workweek, often at a higher rate.