If 51% of All Goods in the Consumer Price Index

question 83

Multiple Choice

If 51% of all goods in the consumer price index (CPI) became more expensive and 49% became cheaper:

• A) inflation would certainly occur.
• B) deflation would most likely occur.
• C) inflation or deflation could occur, depending on the weight of these goods in the basket of goods and the actual percent changes.
• D) deflation would certainly occur if the price of housing was one of the goods that fell.
• E) inflation would occur if the goods whose prices increased did so by the same percentage as the goods whose prices decreased.

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Definitions:

Labor Supply Curve

A graphical representation showing the relationship between the number of hours workers are willing to work and the wage rate, typically illustrating that as wages increase, workers will supply more labor hours.

Preferences and Social Norms

The combination of individual desires and the influence of societal expectations on consumer behavior.

Factor of Production

An input used in the production of goods or services, such as labor, capital, land, or entrepreneurship.

Input

Resources such as labor, materials, and capital used in the production of goods and services.