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Consumer Price Index and Inflation Quiz

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Questions and Answers

What is the primary aim of maintaining moderate inflation at 2%?

To ensure high unemployment rates
To keep the value of money constant and support growth (correct)
To increase the cost of living significantly
To decrease the nominal interest rates

Which of the following accurately describes the Consumer Price Index (VPI)?

A formula primarily for calculating unemployment rates
A method for measuring price changes using a base for comparison (correct)
A measure that reflects income changes
A measure solely based on housing prices

How does the Harmonized Consumer Price Index (HVPI) differ from the Consumer Price Index (VPI)?

HVPI excludes additional items like gambling
HVPI does not consider any form of home ownership
HVPI is calculated using only a single type of good
HVPI includes additional items and addresses home ownership indirectly (correct)

What is the base year in the context of the Consumer Price Index (VPI)?

<p>The year with a price index of 100 (A)</p> Signup and view all the answers

What is the formula for calculating the price index in the VPI?

<p>Price index = Σ(Price of good * Quantity of good) / Σ(Base price of good * Quantity of good) * 100 (C)</p> Signup and view all the answers

Flashcards

Basket of goods

A collection of goods and services representing typical consumer spending patterns. It's used to track changes in prices over time.

Consumer Price Index (VPI)

A measure of price changes in a basket of goods and services. It shows how much prices have increased or decreased compared to a base year.

Base year

A year used as a reference point for calculating price changes. It has a price index of 100, serving as the starting point for comparisons.

Report year

The year for which the price level is calculated using the Consumer Price Index (VPI).

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Inflation rate

The percentage change in the price level over a specific period. It measures how much prices have increased or decreased.