Suppose That the Consumer Price Index (CPI) Was 160 in Year

question 23

Multiple Choice

Suppose that the consumer price index (CPI) was 160 in Year X and 166 in Year Y, inflation during Year Y was approximately:

• A) zero; prices were stable.
• B) 3.8 percent.
• C) 6 percent.
• D) 66 percent.

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Definitions:

Income

This is the financial gain (money) earned by an individual or entity, usually over a period of time, through work, investments, or business ventures.

Demand

The total amount of a good or service that consumers are willing and able to purchase at various prices during a specified period.

Complementary Goods

Products or services that are used together, where the use of one increases the value of the other.

Substitute Products

Goods or services that can be used in place of each other; when the price of one increases, demand for the substitute is likely to increase.