If 51 percent of all goods in the consumer price index (CPI)became more expensive and 49 percent became cheaper
A) inflation would certainly occur.
B) deflation would most likely occur.
C) inflation or deflation could occur,depending on the weight of these goods in the basket of goods and the actual percentage changes.
D) deflation would certainly occur if the price of housing was one of the goods that fell.
E) inflation would occur if the goods whose prices increased did so by the same percentage as the goods whose prices decreased.

Question

Quizplus · Accepted Answer

The inflation or deflation could occur depending on the weight of these goods in the basket of goods and the actual percentage changes. The CPI is a weighted average of prices of a basket of goods and services, where the weights are determined by the relative cost of each component in the total expenditure of the typical consumer. Therefore, the actual percentage changes and weights of goods in the basket would determine whether overall inflation or deflation would occur. It is not possible to determine the outcome solely based on the percentages provided in the question.

If 51 Percent of All Goods in the Consumer Price