Price Indexes Like the CPI Are Calculated Using a Base

question 29

Multiple Choice

Price indexes like the CPI are calculated using a base year. The term base year refers to:

• A) the first year that price data are available.
• B) any year in which inflation was higher than 5 percent.
• C) the most recent year in which the business cycle hit the trough.
• D) an arbitrarily chosen reference year.

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Definitions:

Complementary Products

Products that are used together or enhance the value or experience of each other, leading to increased demand when sold together.

Marked Down

Refers to products that have their prices reduced, usually to encourage quick sales or clear out inventory.

Demand Increase

A rise in the quantity of a product or service that consumers are willing and able to purchase at a given price over a certain period of time.

Maintained Markup

The difference between the retail price and the cost of an item to the retailer, maintained as a percentage of the retail price.