Economics 2281 · O Level · Inflation and deflation

Inflation and deflation — practice question

Some goods make up a larger proportion of an average household’s total expenditure than others. How is this allowed for when a Retail Price Index is built?

  • Aby deducting the goods and services
  • Bby giving a weight to the goods
  • Cby taking an average of price fluctuations during a year
  • Dby using the price elasticity of demand for the goods

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