Based on the weight of the consumer price index (CPI),the price of rental housing increases by 15% and that of owned housing by 5%.During the same year,the price of gasoline falls by 22%.We can say that:
A) the CPI would definitely fall during the year in question.
B) the CPI would definitely rise during the year in question.
C) all other factors being constant, it is likely the CPI would rise during the year in question.
D) all other factors being constant, it is likely the CPI would fall during the year in question.
E) all other factors being constant, the CPI would change by about 6% because that is the average housing change plus the average gasoline change.

Question

Quizplus · Accepted Answer

The weight of rental housing in the CPI is higher than that of owned housing, meaning that an increase in rental housing prices has a greater impact on the overall CPI. Additionally, the decrease in gasoline prices will have a smaller impact on the CPI due to its lower weight in the index. Therefore, all other factors being constant, it is likely that the CPI would rise during the year in question.

Based on the Weight of the Consumer Price Index (CPI),the