If the price of industrial plastic injection molding machines rose by 20% and the price of oranges fell by 20%,then:
A) the Consumer Price Index (CPI) would remain unchanged.
B) the CPI would rise if oranges had a greater weight.
C) the CPI would rise because plastic injection molding machines weigh more physically per unit.
D) the CPI would fall because people buy more oranges than plastic injection molding machines.
E) the CPI would fall by the weighted value of oranges in the CPI, but because industrial plastic injection molding machines are not a consumer good, they would not affect the CPI.

Question

Quizplus · Accepted Answer

The CPI measures the average change in prices paid by consumers for goods and services. Industrial plastic injection molding machines are not consumer goods, so they do not affect the CPI. Only the price change in oranges would impact the CPI.

If the Price of Industrial Plastic Injection Molding Machines Rose