In an Imaginary Economy,consumers Buy Only Razors and Cologne

question 32

Multiple Choice

In an imaginary economy,consumers buy only razors and cologne.The fixed basket consists of 6 razors and 4 bottles of cologne.A razor cost $20 in 2009 and $25 in 2010.A bottle of cologne cost $30 in 2009 and $40 in 2010.Using 2009 as the base year,which of the following statements is correct?

• A)For the typical consumer,the number of dollars spent on razors is equal to the number of dollars spent on cologne in each of the two years.
• B)The consumer price index is 310 in 2010.
• C)The rate of inflation is 29.17% in 2010.
• D)None of the above is correct.

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Definitions:

American Political Culture

A set of shared values, beliefs, and behaviors that define the relationship between citizens and government in the United States.

Individualism

The principle of being independent and self-reliant, favoring freedom of action for individuals over collective or state control.

Liberal Ideologies

Political and social philosophies that emphasize individual rights, democracy, equality, and the welfare state, supporting change in the social, political, and economic realms.