How Are the Weights on the Various Goods and Services

question 16

Multiple Choice

How are the weights on the various goods and services in the CPI basket determined?

• A)A survey is conducted to determine how much of each good and service a typical consumer purchases
• B)All goods and services are weighted equally
• C)Each good and service is weighted according to its price
• D)Weights are randomly assigned

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Definitions:

Quotas

Restrictions set by governments on the amount of a certain good that can be imported or exported.

World Price

The price of a good that is traded on the global market.

Imported

Products or services that are brought into one country from another for sale.

Tariff

A tax imposed by a government on goods and services imported from other countries, often used to protect domestic industries from foreign competition.