Assume that between 2017 and 2018, the CPI of a country rose from 182 to 185. If household incomes rose by 3% during that period of time, then which of the following is true?
A)The purchasing power of household income fell between 2017 and 2018.
B)The purchasing power of household income rose between 2017 and 2018.
C)The purchasing power of household income remained constant between 2017 and 2018.
D)The CPI cannot be used to determine how the purchasing power of household income changes over time.

Question

Quizplus · Accepted Answer

The CPI increased by approximately 1.65% (from 182 to 185), while household incomes rose by 3%. Since income growth outpaced inflation, purchasing power increased.

Assume That Between 2017 and 2018, the CPI of a Country