What do the weights in the Consumer Price Index show?
Select ONE answer:
- changes in the price of the goods and services purchased
- changes in the quality of the goods and services purchased
- the proportion of total expenditure spent on different categories of goods and services
- 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
- Prices are multiplied by weights to give a weighted price index.
- The CPI does not reflect quality changes.
- Correct: The weights give greater importance to changes in the prices of products that households have devoted a high proportion of their expenditure.
- The CPI is seasonally adjusted but this is not the function of the weights.
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