Suppose the Consumer Price Index (CPI)increased by 5 Percent Over

question 2

Multiple Choice

Suppose the Consumer Price Index (CPI) increased by 5 percent over each of the last 5 years while the GDP price index increased by 12 percent annually.Which of the following reasons could explain this difference?

• A) Police unions across the country agreed to substantial salary cuts.
• B) Import good prices increased relative to domestic good prices.
• C) The price of used automobiles increased substantially relative to the prices of other goods.
• D) The price of fighter planes dropped due to increased competition in the aerospace industry.
• E) The price of investment goods purchased by businesses increased substantially relative to the prices of all other goods.

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