If the CPI Was 101

question 98

Multiple Choice

If the CPI was 101.7 in 2006 and 101.5 in 2007,it can be concluded that

• A) 2001 was the base year
• B) all goods were more expensive in 2007 than in 2006
• C) all goods were less expensive in 2007 than in 2006
• D) all goods were less expensive in 2006 than in 2007
• E) the price level fell from 2006 to 2007

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Definitions:

Income Quintile

A statistical measure dividing the population into five equal groups according to their income level to analyze economic inequality.

Lump-Sum Tax

A tax that is a fixed amount, not varying with the taxpayer’s income level or expenditure, making it independent of the taxpayer’s behavior.

Excise Tax

An excise tax is a tax charged on specific goods and services, such as gasoline, cigarettes, and alcohol, typically to discourage their use or generate revenue.

Benefits Principle

A taxation theory that suggests taxes should be levied according to the benefits received by the taxpayer from government services.