Use the following statements to answer this question: I. The inflation rate (the rate of change in the general price level) calculated from a price index like CPI is the same regardless of the base year we use to form the price index.
II) Although the CPI may indicate the general price level increased by 5% last year, there are some consumer products that may have experienced more or less inflation in the past year.
A) I and II are true.
B) I is true and II is false.
C) I is false and II is true.
D) I and II are false.

Question

Quizplus · Accepted Answer

I is true because the inflation rate is a measure of the percentage change in the price level over time, and this percentage change is independent of the base year used to calculate the price index. II is also true because the CPI is a measure of the average change in prices for a basket of goods and services, and it is possible for some individual items in the basket to experience more or less inflation than the average.

Use the Following Statements to Answer This Question: I