If the Consumer Price Index (CPI)was 100 in 2002 and 111.5

question 41

Multiple Choice

If the consumer price index (CPI) was 100 in 2002 and 111.5 in 2007,and a typical household's income was $35,000 in 2002 and $39,025 in 2007,then between 2002 and 2007,real household income

• A) increased.
• B) decreased.
• C) was constant.
• D) may have increased or decreased.
• E) can not be determined.

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Definitions:

Recovery

A period of economic improvement following a recession or downturn.

Trough

The lowest point in an economic cycle, marking the transition from recession to recovery.

Peak

The highest point reached by a commodity or market price before a decline.

Recession

A period of temporary economic decline during which trade and industrial activity are reduced.