Economics 9708 · AS & A Level · Balance of payments

Balance of payments — practice question

An average consumer splits expenditure on food, clothing, accommodation and transport in the ratio 2 : 1 : 4 : 3. Over one year, the price of food decreases by 2%, the price of clothing rises by 4%, the price of accommodation rises by 10% and the price of transport stays unchanged. If the weights in a price index are based on the spending pattern of the average consumer, by how much does the index rise over the year?

  • A2.5%
  • B4%
  • C10%
  • D12%

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