Which of the Following Is True of a Price Index

question 38

Multiple Choice

Which of the following is true of a price index that uses a fixed market basket?

• A) It accurately predicts the impact of rising prices when purchases are made at superstores.
• B) It overstates the importance of items that fall in price.
• C) It takes into account changes in quality while computing price changes.
• D) It excludes new goods and services.

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Definitions:

Co-insurance Clause

A provision in insurance policies requiring the policyholder to bear a portion of the loss by maintaining coverage of a specified percentage of the value of the property to receive full reimbursement.

Fireproof

The quality of being resistant to or capable of withstanding damage by fire.

Insured

A person or entity covered under an insurance policy, receiving financial protection or reimbursement against losses from an insurance company.

Sculptor

An artist who specializes in creating three-dimensional works of art through carving, modeling, or assembling materials like stone, metal, or wood.