If the CPI Is Currently 202, What Does This Tell

question 44

Multiple Choice

If the CPI is currently 202, what does this tell you about inflation between last year and this year?

• A)There was deflation in the economy between this year and last year.
• B)Inflation in the economy between this year and last year was 2%.
• C)Inflation in the economy between this year and last year was 102%.
• D)The CPI measures only the level of prices in a given year, not the percentage change in prices from one year to the next.
• E)This economy is suffering from deflation.

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Definitions:

Congruent

In harmony or agreement; matching in character or kind.

Base-Rate Information

Pallid, factual, statistical information about an entire class of events.

Paired Distinctiveness

Illusory correlation in which items are seen as belonging together because they share some unusual feature.

Availability Heuristic

A cognitive short-cut in which the frequency or likelihood of an event is based on how quickly instances or associations come to mind.