In the Base Year the Price Index

question 22

Multiple Choice

In the base year the price index

• A) will be between 1 and 100.
• B) will always equal 100.
• C) equals 100 times the cost of the market basket in the base year.
• D) will equal the year.

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Definitions:

Form Hypothesis

The process of developing a proposed explanation for a phenomenon, made as a starting point for further investigation.

Circular-Flow Model

A diagram that traces the flow of resources, products, income, and revenue among economic decision makers.

Households

Individuals or groups of people living together as a single unit, making economic decisions regarding consumption, savings, and labor supply.

Resource Market

A market where resources (like labor, capital, and raw materials) used to produce goods and services are bought and sold.