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Chapter 7: Q.1 Critical Thinking Questions (page 157)

If each household in a nation were to track a consumer price index that averaged the prices of items consumed solely by that household, why would you anticipate that the annual rate of change of every household's average prices likely would differ?

Short Answer

Expert verified

The annual rate of change of every household's average prices likely would differ as there is a wide pay uniqueness between poor people and the rich, which prompts a distinction in the normal costs.

Step by step solution

01

introduction 

The yearly pace of progress of each family's normal costs would liable to vary on the grounds that every family has an alternate bin of products. There is a wide pay uniqueness between poor people and the rich, which prompts a distinction in the normal costs.

02

explanation

The economy contains a colossal number of individuals that have various inclinations for the merchandise consumed by them. Likewise, there is a boundless pay difference between poor people and rich, so the merchandise which is costly is just consumed by the rich individuals.

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Most popular questions from this chapter

Suppose that among the 15 million unemployed people in Problem 7-17, currently, 6.9 million are frictionally unemployed, 5.9 million are cyclically unemployed, and 2.2 million are structurally unemployed. What is the natural rate of unemployment?

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