Inflation- Consumer Price Index

The year in which the index begins is known as:

• face year

• trace year

• base year

• index value

Prices in the following are expressed as changes on the base of:

• 50

• 75

• 1.00

• 100

The prices index for different commodities are always added together and divided by two.

• True

• False

• Sometimes

• All of the time

In order to measure the rate of inflation, it is necessary to measure the rate at which prices:

• differ

• increase

• decrease

• change

The index number deals with the ________changes of a number of different goods and services.

• percentage

• average

• price

• ratio

When goods are weighted, the price index for each commodity is multiplied by the:

• Commodity

• Index

• Weight

• One hundred

Inflation takes place when prices, on average:

• fall

• fluctuate

• remain the same

• rise

Inflation may also be described as a situation where the value of money is:

• falling

• fluctuating

• increasing

• remain the same

The formula for Weighted Index is:

• Commodity x Price= WI

• Price x Index= WI

• Price x Weight = WI

• Weight x Index= WI

These are all effects of inflation EXCEPT:

• Borrowers gain at the expense of lender

• Inflation and the money supply

• It affects the distribution of income

• It affects the balance of payment