Price Indexes Like the CPI Are Calculated Using a Base

question 107

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 per cent.
• C)the most recent year in which the business cycle hit the trough.
• D)an arbitrarily chosen reference year.
• E)the year in which inflation was at its minimum.

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Definitions:

CPI

Short for Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Rookie Salary

The initial compensation package awarded to a professional athlete in their first year or season of play.

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, typically used as an indicator of inflation.

Gallon of Milk

A standard unit of measure for liquid volume in the United States, equivalent to approximately 3.785 liters, often used as a benchmark for pricing in grocery stores.