The Weights Assigned to the Components in the Retail Price

question 75

Multiple Choice

The weights assigned to the components in the Retail Price Index are based on _____.

• A) the importance of the component in the average household's consumption
• B) the retail prices of the goods
• C) past trends in the prices of the goods
• D) the total number of components that are used to compute the index

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Definitions:

Explicit Costs

Direct, out-of-pocket payments for wages, materials, rent, and other expenditures incurred in the conduct of a business.

Equilibrium Interest Rate

The interest rate at which the quantity of money demanded equals the quantity of money supplied.

Loanable Funds

The total amounts of capital available for borrowing, which includes savings and any additional credits created by financial institutions.

Market

A conceptual or physical place where buyers and sellers convene to exchange goods, services, and information.