Table 20-8 -Between 2011 and 2012,the CPI of a Small Nation Rose

question 130

Multiple Choice

Table 20-8

-Between 2011 and 2012,the CPI of a small nation rose from 182 to 185.If household incomes rose by 3% during that period of time,which of the following is true?

• A) The purchasing power of household income rose between 2011 and 2012.
• B) The purchasing power of household income fell between 2011 and 2012.
• C) The purchasing power of household income remained constant between 2011 and 2012.
• D) The CPI cannot be used to determine how the purchasing power of household income changes over time.

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Definitions:

Free Trade Area

A region where member countries have agreed to reduce or eliminate trade barriers, such as tariffs and quotas, among themselves.

Dumping

The practice wherein an exporter sells products in a foreign state for less than the price charged for the same or comparable goods in the exporter’s home market.

Auto Parts Industry

Refers to the sector of the economy focused on the manufacturing, distribution, and retailing of vehicle parts and accessories.

Significantly Lesser Price

A sale or transaction price that is considerably lower than the usual or market value.