Which of the Following Is True About the Consumer Price

question 153

Multiple Choice

Which of the following is true about the consumer price index (CPI) and the GDP price index?

• A)Both measures weigh prices by the quantities consumed in some base year.
• B)Both yield identical numbers for price level changes for any two years.
• C)A price level change indicated by the CPI is usually smaller because it includes only prices for a limited number of goods.
• D)The CPI measures changes in relative prices of goods; the GDP price index measures changes in the price level.
• E)A price level change indicated by the GDP price index is usually smaller because people tend to find substitutes for goods whose prices rise sharply.

---

Definitions:

Aggregate Supply

The total supply of goods and services produced within an economy at a given overall price level in a given time period.

Central Bank

An institution designed to oversee the banking system and regulate the quantity of money in the economy

Economic Fluctuations

Variations in the level of economic activity, characterized by periods of economic growth and contraction.

Electoral Calendar

A schedule outlining the dates of significant electoral events, such as elections and referendums, across different jurisdictions.