The Consumer Price Index (CPI)measures

question 16

Multiple Choice

The Consumer Price Index (CPI) measures

• A)the prices of a few consumer goods and services.
• B)the prices of those consumer goods and services that increased in price.
• C)the average of the prices paid by urban consumers for a fixed market basket of goods and services.
• D)consumer confidence in the economy.
• E)the average of the costs paid by businesses to produce a fixed market basket of consumer goods and services.

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Definitions:

Futures Contract

An arrangement, enforceable by law, where individuals agree to trade a specified commodity or financial instrument at a previously established price, to be fulfilled at a specified time ahead.

Forward Contract

is a non-standardized contract between two parties to buy or sell an asset at a specified future date for a price agreed upon today.

Settlement Date

The date on which a trade is finalized, and the buyer must make payment and the seller must deliver the asset.

Option Contract

A financial contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price within a certain period.