Suppose the Value of the CPI Is 1

question 125

Multiple Choice

Suppose the value of the CPI is 1.100 in year one, 1.160 in year two, and 1.270 in year three.Assume also that the price of computers increases by 3% between year one and year two, and by another 3% 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

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Definitions:

Liable

Legally responsible or obligated, often in the context of paying compensation for harm or damages.

Agency Relationship

A relationship between two parties in which one party (the agent) agrees to represent or act for another party (the principal).

Restatement (Third)

A reference to the third series of the Restatements of the Law, which are authoritative summaries of common law in the United States, aimed at clarifying, modernizing, and improving the law.

Automatic Termination

A clause within a contract or agreement that causes it to end automatically upon the occurrence of specific conditions.