Which of the following statements is MOST accurate?
A) The United States price level will place a relatively light weight on commodities produced and consumed in America, while the European price level will place a relatively heavy weight on commodities produced and consumed in Europe.
B) The United States price level will place a relatively light weight on commodities produced and consumed in America, and the European price level will place a relatively light weight on commodities produced and consumed in Europe.
C) The United States price level will place a relatively heavy weight on commodities produced and consumed in America, and the European price level will place a relatively heavy weight on commodities produced and consumed in Europe.
D) The United States price level will place a relatively heavy weight on commodities produced and consumed in Europe, and the European price level will place a relatively heavy weight on commodities produced and consumed in America.
E) The United States price level will place a relatively light weight on commodities produced and consumed in Europe, and the European price level will place a relatively heavy weight on commodities produced and consumed in America.

Question

Quizplus · Accepted Answer

Price levels in a region typically reflect the consumption patterns of that region, meaning they place a heavier weight on locally produced and consumed commodities. This is because the price indices are designed to measure the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, which naturally includes a higher proportion of local goods.

Which of the Following Statements Is MOST Accurate