7.4.1 - Consumer Price Index
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Practice Questions
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What does CPI measure?
💡 Hint: Think about consumer spending.
Name one method to calculate the CPI.
💡 Hint: What method uses base year quantities?
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does CPI stand for?
💡 Hint: Think about what it tracks.
True or False: The Paasche index uses base year quantities.
💡 Hint: Remember which method adjusts to current prices.
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Challenge Problems
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Calculate the CPI given the following prices for a basket over two years: Year 1 (10 items at $2 each) Year 2 (10 items at $2.5 each).
💡 Hint: Use the CPI formula: (Current Year Cost / Base Year Cost) × 100.
Discuss the implications of a rapidly increasing CPI for small businesses.
💡 Hint: Consider how consumers react to price changes.
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