If a Nation Experienced an Inflation Rate of About 12

question 78

Multiple Choice

If a nation experienced an inflation rate of about 12 percent and then, 5 years later, had an inflation rate of about 15 percent, which of the following statements best describes what was happening to purchasing power during that period?

• A) The purchasing power of businesses did not see a change throughout the period, but consumers did.
• B) The average consumer's purchasing power was lower at the beginning of period than at the end.
• C) The country was experiencing a recession, prices were universally high throughout the period, and purchasing power declined for everyone.
• D) The average consumer's purchasing power was higher at the beginning of the period than at the end.

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Definitions:

Correlation Coefficient

A numeric measure that indicates the extent to which two variables fluctuate together.

Absolute Value

Refers to the distance of a number from 0 on the number line, without considering direction.

Correlation Coefficient

A statistical index measuring the strength and direction of a linear relationship between two variables.

Average Error

A statistical measure that averages the absolute differences between the observed values and the values predicted by a model.