There Are Separate CPIs for Various Components of the Market

question 6

Multiple Choice

There are separate CPIs for various components of the market basket. For example, the CPI for new motor vehicles (1982-84 = 100) was 132.4 in 2008.
If there were no adjustments for quality improvements, then how much did new motor vehicle prices increase from the base period to 2008?

• A) By 24%
• B) By 132.4%
• C) By 32.4%
• D) None of the answers are correct.
• E) Impossible to say because the CPI doesn't measure prices.

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Definitions:

Attribution Theory

A concept in psychology that explains how individuals infer the causes of their own and others' behavior.

Locus of Control

A psychological concept referring to the extent to which individuals believe they have control over the events affecting their lives.

Cognitive Dissonance

The mental discomfort experienced by a person who holds two or more contradictory beliefs, ideas, or values at the same time.

Primacy Effect

A cognitive bias that results in a person recalling or valuing the first pieces of information encountered more than information presented later.