Suppose a Basket of Goods and Services Has Been Selected

question 92

Multiple Choice

Suppose a basket of goods and services has been selected to calculate the consumer price index.In 2005,the basket of goods cost $108.00;in 2006,it cost $135.00;and in 2007,it cost $168.75.Which of the following statements is correct?

• A)Using 2005 as the base year,the economy's inflation rate was higher in 2007 than it was in 2006.
• B)If 2007 is the base year,then the CPI is 33.75 in 2006.
• C)If the CPI is 156.25 in 2007,then 2005 is the base year.
• D)Using 2005 as the base year,the economy's inflation rate for 2006 was 27 percent.

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Definitions:

Hydrocarbons

Organic compounds consisting entirely of hydrogen and carbon, found in fossil fuels and used as a primary energy source and raw material in chemical manufacturing.

Suspended Particles

Tiny solid or liquid particles that are suspended in air or water, which can be harmful to human health and the environment when inhaled or ingested.

Pollutants

Substances introduced into the environment that cause harm or discomfort to the ecosystem or living organisms, including chemicals, waste materials, and noise.

Foam Insulation

A type of building insulation that is made from various types of foam and is used to reduce heat transfer.