The Concept of a Price Index Is That

question 110

Multiple Choice

The concept of a price index is that:

• A) it is a measure of how the items included in the typical basket of goods have changed over time; it also includes price changes over time.
• B) it is a measure of how the items included in the typical basket of goods have changed over time, while holding price changes constant.
• C) it is a measure of how the prices included in the typical basket of goods have changed over time, holding the items in the consumption bundle constant.
• D) it is an index of how much gasoline prices have increased, because all prices follow the price of gasoline.
• E) it is an index of how much housing prices have changed, because housing is the most important item in the consumption bundle.

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Definitions:

Major External Factors

Key influences originating outside of an organization that can significantly impact its performance and strategy, such as economic, social, technological, and political conditions.

Direct Competition

Two or more businesses offering products or services that directly compete against each other.

Currency Fluctuation

Refers to the variations in the value of one currency relative to another, which can impact international trade and investments.

Substitute Products

Goods and services that perform very similar functions and can be used in place of one another.