When Computing the Cost of the Basket of Goods and Services

question 149

Multiple Choice

When computing the cost of the basket of goods and services purchased by a typical consumer,which of the following changes from year to year?

• A)the quantities of the goods and services purchased
• B)the prices of the goods and services
• C)the goods and services making up the basket
• D)All of the above are correct.

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Indifference Curve

A graph showing different combinations of two goods that provide equal satisfaction or utility to a consumer.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given budget at specific prices.

Stock Market Downturn

A period during which stock prices fall across the majority of the market, often reflecting broader economic trends or issues within specific sectors.