If We Read That the CPI Had Value of 120

question 145

Multiple Choice

If we read that the CPI had value of 120 in 2005,we would know that

• A) the typical market basket in 2005 was 20 percent more expensive than in the previous year
• B) the typical market basket in 2005 was 120 percent more expensive than in the base year
• C) the typical market basket in the base year was 120 percent more expensive than in 2005
• D) the typical market basket in 2005 was 20 percent more expensive than in the base year
• E) the cost of a loaf of bread is higher now than it has been during the past ten years

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Definitions:

Complement

A good or service that is used together with another good or service, increasing its demand.

Income Increase

A rise in the amount of money received by individuals or entities, typically through earnings, investments, or bonuses.

Normal Good

A good for which demand increases when consumer income rises, and falls when consumer income decreases, all other factors being equal.

Student Income

The amount of money earned or received by students from employment, grants, stipends, or other sources while pursuing their studies.