The Purpose of a Base Year When Constructing a Price

question 89

Multiple Choice

The purpose of a base year when constructing a price index is:

• A)Showing how the output values rise from year to year
• B)Encourage inflation
• C)Providing a means to compare the economy's output across different time periods
• D)To show why expenditures on government goods and services need to increase
• E)Indicate the progress in keeping prices low

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Definitions:

Figures

Represents numerical data or statistical information, often displayed in graphs, charts, or tables.

Gestalt Principles

Psychological theories proposing that people naturally perceive objects as organized patterns and objects, not just as simple aggregates of their components.

Grouping

Grouping refers to the process of organizing objects, individuals, or ideas into categories or clusters for easier understanding or analysis.

Size Constancy

The perceptual phenomenon in which the size of an object is perceived to remain constant despite changes in its distance from the observer.