Which of the following is NOT true about inflation? The Bureau of Labor Statisti
ID: 1154749 • Letter: W
Question
Which of the following is NOT true about inflation?
The Bureau of Labor Statistics calculates the Consumer Price Index by comparing the price of a market basket of goods in one year to the price estimate of the same market basket in a previous term.
Inflation refers to a rise in the general level of prices, not just an increase in prices of a few goods that are most commonly purchased (just as gasoline and food). While inflation reflects increases in most goods in the BLS "market basket" of goods, not every single consumer good has to have a higher price when inflation is detected.
Inflation exists when the price of goods that comprise at least 50% of consumer spending increases.
The Consumer Price Index is calculated by dividing the current price of the market basket of goods by the price estimate of the same basket in a prior period.
a.The Bureau of Labor Statistics calculates the Consumer Price Index by comparing the price of a market basket of goods in one year to the price estimate of the same market basket in a previous term.
b.Inflation refers to a rise in the general level of prices, not just an increase in prices of a few goods that are most commonly purchased (just as gasoline and food). While inflation reflects increases in most goods in the BLS "market basket" of goods, not every single consumer good has to have a higher price when inflation is detected.
c.Inflation exists when the price of goods that comprise at least 50% of consumer spending increases.
d.The Consumer Price Index is calculated by dividing the current price of the market basket of goods by the price estimate of the same basket in a prior period.
Explanation / Answer
Inflation refers to the increase in general price level with in an economy in a sustained manner.
Consumer price index is generally used to measure inflation.
However, increase in price of goods that comprise at least 50% of consumer spending does not implies inflation.
Hence, the correct answer is the option (c).
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