ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Assume the CPI increases from 100 to 120 between 2014 and 2015. Which of the following must be true?
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A gallon of gas that was $2.50 in 2014 will be $3.00 in 2015
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The price for all goods increased between 2014 and 2015
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There was unanticipated inflation
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The average price of a specific market basket increased 20%
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There was disinflation
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Explanation:
Detailed explanation-1: -Answer and Explanation: If the Producer’s Price Index changes from 100 to 90, economists will know that D. inflation is decreasing in the economy.
Detailed explanation-2: -Measures of Inflation: Consumer price index (CPI) – An index that measures the prices of a fixed “market basket” of some 300 goods and services bought by a “typical” consumer.
Detailed explanation-3: -When the average price level increases by 10 percent in a given year, which of the following must increase by 10 percent for real output to remain constant? inflation and unemployment.
Detailed explanation-4: -The three largest components of the CPI are housing, transportation, and food/beverages in that order.
There is 1 question to complete.