Economics 2281 · O Level · Inflation and deflation

Inflation and deflation — practice question

A Consumer Prices Index (CPI) is made up of four items. The table gives the percentage change in price for each item over a one-year period and the weighting of each item. Which price change will have the greatest effect on the level of the CPI?

  • Afood, $+5\%$, weight $0.30$
  • Bhousing, $+6\%$, weight $0.20$
  • Crecreation, $+3\%$, weight $0.40$
  • Dtransport, $+4\%$, weight $0.10$

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