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Which Is Likely to Have the Larger Effect on the CPI

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Essay

Which is likely to have the larger effect on the CPI, a 2 percent increase in the price of food or a 3 percent increase in the price of diamond rings? Explain.


Definitions:

Interest

The charge for borrowing money or the return on investment of saved funds.

Months

Units of time, each approximately 30-31 days long, used to measure durations and periods in the calendar year.

Deposit

A quantity of funds saved or stored in a banking account, often for the purpose of accruing interest.

Interest

The cost of borrowing money or the payment received for depositing money, usually expressed as a percentage of the principal over a period of one year.

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