Economics Multiple Choice Question – 3 August 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

What do the weights in the Consumer Price Index show?

Select ONE answer:

  1. changes in the price of the goods and services purchased
  2. changes in the quality of the goods and services purchased
  3. the proportion of total expenditure spent on different categories of goods and services
  4. the seasonal fluctuations in the price of clothing, food and fuel

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 3

  1. Prices are multiplied by weights to give a weighted price index.
  2. The CPI does not reflect quality changes.
  3. Correct: The weights give greater importance to changes in the prices of products that households have devoted a high proportion of their expenditure.
  4. The CPI is seasonally adjusted but this is not the function of the weights.

 

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