In Computing a Price Index

question 387

Multiple Choice

In computing a price index,

• A) the most recent year is always set equal to 100.
• B) both the quantities in the market basket and the prices change from year to year.
• C) the quantities in the market basket stay the same while the prices differ.
• D) the base year must be one for which the inflation rate was zero.

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Definitions:

Valence

The intrinsic attractiveness or averseness of an event, object, or situation.

Arousal

A physiological and psychological state of being awake or reactive to stimuli, involving the activation of certain physiological pathways and cognitive processes.

Two-factor Theory

A psychological theory suggesting emotions are based on physiological arousal and cognitive labels.

Cognitive Interpretation

The mental process of assigning meaning to sensory information and experiences, influencing individuals' perceptions and understanding of the world.