The CPI Is Called a Fixed-Weight Price Index Because

question 6

Multiple Choice

The CPI is called a fixed-weight price index because:

• A) people do not change their purchasing preferences over time.
• B) the composition of the market basket changes from one period to the next.
• C) the composition of the market basket remains unchanged from one period to the next.
• D) the CPI does not change over time.

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Definitions:

Monetary Policy

The set of actions by a central bank or monetary authority to control the supply of money and interest rates in its economy.

Monetary Policy

The process by which the central bank or monetary authority of a country manages the supply of money in order to achieve specific goals such as controlling inflation, maintaining employment, and stabilizing the currency.

Interest Rates

The cost of borrowing money or the return on investment for savings, typically expressed as a percentage.

Taxes

Compulsory financial charges or levies imposed by a government on individuals or organizations to fund public expenditures.