If People Bought the Same Market Basket of Goods as the Average

question 116

Multiple Choice

If people bought the same market basket of goods as the average consumer again and again:

• A) the consumer price index (CPI) would be extremely accurate.
• B) the CPI would be less accurate.
• C) the gross domestic product (GDP) deflator would be more accurate.
• D) the GDP deflator would be less accurate.
• E) the CPI would be biased upward relative to the GDP deflator.

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Definitions:

Price Ceilings

Government-imposed limits on how high a price can be charged for a good or service, intended to protect consumers.

Agricultural Research

The systematic pursuit to increase understanding and improve techniques in farming, including crop production, livestock care, soil management, and pest control.

Farm Crop Insurance

A type of insurance that protects farmers against the loss of their crops due to natural disasters, such as floods, drought, and hail, or the loss of revenue due to declines in the prices of agricultural commodities.

Parity Concept

A principle in economics that describes a state where the purchasing power of two currencies is equal when a basket of identical goods is priced the same in both countries.