i. To deflate sales, the actual sales are multiplied by the wholesale price index and the result multiplied by 100.
Ii) The CPI serves only one major function: as an economic indicator of the rate of inflation.
Iii) To construct a special-purpose index designed to measure general business activity, the weights are based on the judgments of the statistician and assigned to each series.
A) (i), (ii) and (iii) are all correct statements
B) (i) and (ii) are correct statements, but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (iii) is a correct statement, but not (i) or (ii).
E) All statements are false

Question

Quizplus · Accepted Answer

Statement (iii) is correct as special-purpose indices often use subjective weights based on expert judgment. Statements (i) and (ii) are incorrect; deflating sales typically involves dividing by a price index, and the CPI has multiple functions beyond indicating inflation.

I to Deflate Sales, the Actual Sales Are Multiplied by the Wholesale