Which of the following is correct about the basket of goods that makes up a country's consumer price index (CPI)?

Choose 1 answer:
(A) It consists of the same goods for every country that uses it
(B) It holds both the prices of goods and the goods themselves constant year after year
(C) It updates the goods in the basket annually, but keeps prices constant
(D) It updates the prices of the goods in the basket annually, but keeps the goods constant
(E) It updates both the prices of the goods and the goods themselves annually

Question

Which of the following is correct about the basket of goods that makes up a country's consumer price index (CPI)?

Choose 1 answer:
(A) It consists of the same goods for every country that uses it
(B) It holds both the prices of goods and the goods themselves constant year after year
(C) It updates the goods in the basket annually, but keeps prices constant
(D) It updates the prices of the goods in the basket annually, but keeps the goods constant
(E) It updates both the prices of the goods and the goods themselves annually

Accepted Answer

***D*** ∻Key Concept∻ ⚹Consumer Price Index (CPI) Updating Process⚹ ∻Explanation∻ ⚹The basket of goods and services in the CPI is periodically reviewed and updated to reflect changes in consumer spending patterns, but the prices of the goods and services in the basket are updated more frequently, typically annually or monthly, to reflect current market prices.⚹◊How does the Consumer Price Index (CPI) impact a country's macroeconomic policy decisions?⍭ Generate me a similar question◊

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