I the CPI Serves Only One Major Function: as an Economic

question 24

Multiple Choice

i. The CPI serves only one major function: as an economic indicator of the rate of inflation. ii. To construct a special-purpose index designed to measure general business activity, the weights are based on the judgments of the statistician and assigned to each series.
iii. The Consumer Price Index measures the change in prices of a fixed market basket of goods and services from one period to another.

• A) (i), (ii), and (iii) are all correct statements.
• B) (i) and (ii) are correct statements but not (iii).
• C) (i) and (iii) are correct statements but not (ii).
• D) (ii) and (iii) are correct statements but not (i).
• E) (i), (ii), and (iii) are all false statements.

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Definitions:

Inferior Goods

Products whose demand decreases as the income of the consumer increases, often because consumers opt for higher quality alternatives when they can afford them.

Southwest Airlines

An American low-cost airline known for its unique business model and customer service approach.

New Markets

Market segments or geographical areas that were previously unexplored or underexploited by a business or industry.

Elastic Demand

A situation where the quantity demanded of a good or service changes significantly as its price changes.