Suppose the Price Index Was 100 in 2014,109 in 2015,and

question 30

Multiple Choice

Suppose the price index was 100 in 2014,109 in 2015,and the inflation rate was lower between 2015 and 2016 than it was between 2014 and 2015.This means that

• A)the price index in 2016 was lower than 109.0.
• B)the price index in 2016 was lower than 118.9.
• C)the price index in 2016 was lower than 118.0.
• D)the inflation rate between 2015 and 2016 was lower than 1.09 percent.

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Definitions:

Marginal Utility

The increased utility or satisfaction derived by a buyer from the consumption of one extra unit of a good or service.

Income Effect

The fluctuation in income for either an individual or the economy and its influence on the demand levels for certain goods or services.

Substitution Effect

The economic principle that as prices rise, consumers will replace more expensive items with less costly alternatives.

Marginal Utility

The extra contentment a customer obtains by using an additional unit of a product or service.