Economics 9708 · AS & A Level · Balance of payments

Balance of payments — practice question

An average consumer allocates his spending across food, clothing, accommodation and transport in the ratio 2 : 1 : 4 : 3. Over the course of a 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 does not change. If the weights in a price index are based on the expenditure of the average consumer, what is the rise in the index over the year?

  • A2.5 %
  • B4 %
  • C10 %
  • D12 %

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