Multiple Choice
If housing prices increase by 25 percent and the price of all other goods decreases by 22 percent,then
A) the consumer price index (CPI) would definitely fall during the year in question because housing prices do not constitute the majority of the CPI.
B) the consumer price index (CPI) would definitely rise during the year in question because housing prices do constitute the majority of the CPI.
C) the consumer price index (CPI) would rise by about 1.5 percent because housing constitutes about half of the market basket in the CPI.
D) because housing spending is considered an investment,the producer price index (PPI) but not the consumer price index (CPI) would be the only price index affected by the change.
E) the consumer price index (CPI) would only be affected in a small way because it includes about 8,000 goods and housing is only one of the 8,000.
Correct Answer:
Verified
Correct Answer:
Verified
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