The Technique Currently Used to Calculate the CPI Implicitly Assumes

question 26

Multiple Choice

The technique currently used to calculate the CPI implicitly assumes that over time consumers buy

• A) relatively more of goods whose relative prices are rising.
• B) relatively less of goods whose relative prices are rising.
• C) the same relative quantities of goods as in a base year.
• D) goods and services whose quality improves at the rate of growth of real income.

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Definitions:

Subduction

The process by which one tectonic plate moves under another and sinks into the mantle as the plates converge.

Thrust Faulting

A type of faulting where one rock layer is pushed up and over another due to compressional forces.

Compression

A force that acts to reduce volume or shorten a material, critical in the formation of geological structures.

Tension

A force that stretches a material, attempting to elongate it.