Suppose the market basket consists of 400X, 150Y, and 220Z. Current-year prices are $1.50 for each unit of X, $0.50 for each unit of Y, and $4.60 for each unit of Z. Base-year prices are $1.00 for each unit of X, Y, and Z. Approximately what is the value of the CPI in the current year?
a. 457
b. 354
c. 219
d. 119
Answer: c. 219
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In the basic Keynesian model, a decrease in transfer payments:
A. increases potential output. B. reduces potential output. C. increases short-run equilibrium output. D. reduces short-run equilibrium output.
If the MPC is 5/6 then the multiplier is
a. 6/5, so a $200 increase in government spending increases aggregate demand by $240. b. 5, so a $200 increase in government spending increases aggregate supply by $1000. c. 6, so a $200 increase in government spending increases aggregate demand by $1200. d. 6/5, so a $200 increase in government spending increases aggregate supply by $1200.
Which statement is false?
A. A poor person who smokes pays a higher percentage of her income in cigarette excise tax than a rich person. B. The cigarette excise tax is a regressive tax. C. The cigarette excise tax is a direct tax. D. None of these statements are false.
The Public Broadcasting Service and National Public Radio are examples of
A. nonprofit government-funded organizations. B. private for-profit companies. C. government agencies. D. private nonprofit organizations.