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In an Imaginary Economy,consumers Buy Only Shirts and Pants

Question 40

Multiple Choice

In an imaginary economy,consumers buy only shirts and pants.The fixed basket consists of 6 shirts and 4 pairs of pants.A shirt cost $20 in 2006 and $25 in 2007.A pair of pants cost $30 in 2006 and $40 in 2007.Using 2006 as the base year,which of the following statements is correct?


A) For the typical consumer, the number of dollars spent on shirts is equal to the number of dollars spent on pants in each of the two years.
B) The consumer price index is 134 in 2007.
C) The rate of inflation is 29.17% in 2007.
D) All of the above are correct.

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