Suppose the Value of the CPI Is 1

question 40

Multiple Choice

Suppose the value of the CPI is 1.100 in year one, 1.210 in year two, and 1.331 in year three. Assume also that the price of computers increases by 3 percent between year one and year two, and by another 3 percent between year two and year three. The price level is increasing, the inflation rate is ________, and the relative price of computers is ________.

• A)increasing; increasing
• B)constant; increasing
• C)constant; decreasing
• D)increasing; decreasing

---

Definitions:

Paycuts

Reductions in an employee's salary or wages, often implemented as a cost-saving measure or in response to economic downturns.

Emotional Effect

The impact on individuals' feelings or emotional states resulting from specific stimuli or situations.

Anxiety

A mental health condition characterized by feelings of worry, anxiety, or fear that are strong enough to interfere with one's daily activities.

Communication Difficulties

Challenges faced while trying to convey or understand messages effectively between individuals or groups.