Which Statement Best Represents the Purpose for Measuring Annual Inflation

question 76

Multiple Choice

Which statement best represents the purpose for measuring annual inflation (or deflation) ?

• A) The main purpose is to find out how much the price of gasoline has increased from year to year.
• B) The main purpose is to find out whether more goods have increased (or decreased)in price compared to the number of goods whose price has decreased (or increased).
• C) The main purpose is to find out whether the overall cost of living has changed.
• D) The main purpose is to find out whether the economy has produced more goods this year than last year.
• E) The main purpose is to find out whether the cost of entertainment is more expensive (or cheaper)this year than last year.

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Definitions:

Purchase More

The action of buying an increased quantity of goods or services than previously acquired.

Marginal Utility

The additional contentment a customer derives by consuming one more unit of a product or service.

Demand

The desire and ability of consumers to purchase goods and services at various price levels.

Budget Line

A budget line represents the combination of goods and services that a consumer can purchase given their income and the prices of those goods and services.