Consider a Small Economy in Which Consumers Buy Only Two

question 186

Multiple Choice

Consider a small economy in which consumers buy only two goods: pretzels and cookies. In order to compute the consumer price index for this economy for two or more consecutive years, we assume that

• A)the percentage change in the price of pretzels is equal to the percentage change in the price of cookies from year to year.
• B)the number of pretzels bought by the typical consumer is equal to the number of cookies bought by the typical consumer in each year.
• C)neither the number of pretzels nor the number of cookies bought by the typical consumer changes from year to year.
• D)neither the price of pretzels nor the price of cookies changes from year to year.

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Definitions:

Add

The mathematical operation of combining two or more quantities to achieve a sum or total.

DS

An acronym commonly used for Decision Support systems, which assist in making decisions, often through the analysis of data.

Add

To combine one number or quantity with another to obtain a total.

Conj

Short for conjunction, a part of speech that connects words, sentences, phrases, or clauses.