The Consumer Price Index Compares the

question 7

Multiple Choice

The Consumer Price Index compares the

• A) prices of all goods and services in the economy compared to the prices of those goods and services in a base year.
• B) prices of consumer goods and services that a household purchases to the prices of those goods and services purchased in a base year.
• C) prices of producer goods and services that are made for consumers to the prices of those goods and services in a base year.
• D) prices of goods and services that are purchased by producers to the prices of those goods and services in a base year.
• E) prices of goods and services that are purchased by consumer manufacturers to the prices of those goods and services in a base year.

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Definitions:

Status Quo

The existing state of affairs; in prospect theory, the current situation from which gains and losses are calculated.

Utility

A measure of satisfaction or value that consumers receive from consuming goods and services.

Endowment Effect

The tendency people have to place higher valuations on items they possess (are endowed with) than on identical items that they do not possess; perhaps caused by loss aversion.

Behavioral Economists

Economists who study how psychological, social, cognitive, and emotional factors affect the economic decisions of individuals and institutions.