Suppose a Basket of Goods and Services Has Been Selected

question 64

Multiple Choice

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been chosen as the base year.In 2012,the basket's cost was $80.00;in 2013,the basket's cost was $84;and in 2014,the basket's cost was $87.60.The value of the CPI was

• A)100 in 2012.
• B)105 in 2013.
• C)109.5 in 2014.
• D)All of the above are correct.

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Definitions:

Monetarists

Economists who believe that variations in the money supply have major influences on national output in the short run and the price level over longer periods, as well as on inflation.

Money Supply

The overall quantity of currency and other liquid instruments circulating in an economy at a particular time.

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Supply-Side Economics

An economic theory that advocates for lower taxes and deregulation to stimulate production and economic growth.