Which of the Following Is True About the Consumer Price

question 166

Multiple Choice

Which of the following is true about the consumer price index (CPI) and the GDP price index?

• A) Both measures weigh prices by quantities consumed in some base year.
• B) Both yield identical numbers for price level changes for any two years.
• C) Both CPI and the GDP price index underestimate changes in the price level in an economy.
• D) The CPI measures changes in relative prices of goods, while the GDP price index measures changes in the absolute price level of a fixed basket of goods and services.
• E) CPI includes products that are widely used, while the GDP price index includes all goods and services.

---

Definitions:

Parsimony

A principle in science and philosophy that prefers the simplest explanation that accounts for all observed phenomena, often referred to as Occam's razor.

Theory of Reasoned Action

A theory that predicts an individual's behavior based on their intention to perform the behavior, which is determined by attitudes towards the behavior and subjective norms.

Planned Behavior

A theory that predicts individuals' behavior based on their intentions, attitudes towards the behavior, subjective norms, and perceived behavioral control.

Theory of Planned Behavior

This theory posits that human behavior is guided by three kinds of considerations: behavioral beliefs, normative beliefs, and control beliefs.