Which of the Following Is a Reason Why the CPI

question 30

Multiple Choice

Which of the following is a reason why the CPI is not calculated as a simple average of all prices?

• A) Some goods experience large price changes and the CPI would be too variable if computed by a simple average.
• B) Goods differ in their importance in the average consumer's budget.
• C) Some goods never experience price changes and the CPI would not be variable enough if computed as a simple average.
• D) It would be difficult to compute a price index using a simple average of all prices.

---

Definitions:

Covenanted Community

A community formed through a formal agreement or covenant, often characterized by shared beliefs, values, or objectives, particularly in a religious or social context.

Massachusetts Bay Colony

An early English settlement established in 1630 by Puritan settlers seeking religious freedom in what is now Massachusetts, becoming one of the most successful and influential early colonies.

1630-1640

A decade during which significant English Puritan migration to North America occurred, leading to the establishment of early settlements.

Massachusetts Bay Colony

The Massachusetts Bay Colony was an early English settlement on the East Coast of North America in the late 17th century, serving as a significant Puritan stronghold.