If Consumers See a Measurable Increase in the Price of Coffee

question 3

Multiple Choice

If consumers see a measurable increase in the price of coffee, they are likely to change their consumption to less expensive tea. These substitutions would show-up in the .

• A)Chained Consumer Price Index
• B)Remedial Price Index
• C)Core Inflation Index
• D)Numerical Cost Index

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Definitions:

Discount Rate

The interest rate charged by central banks on loans they provide to commercial banks or financial institutions.

Money Supply

The entire amount of cash and cash equivalents present in an economy at a designated time, including money in the form of coins, notes, and funds held in checking and savings accounts.

Money Multiplier

A factor that quantifies the amount of additional money that can be created in a bank's lending process for a given amount of reserves.

Excess Reserves

Excess reserves are the capital reserves held by a bank or financial institution in excess of what is required by regulators, central bank, or other financial authority.