Question

4. Problems and Applications Q4 The CPI for "All Items" was 249.554 in March 2018, and 254.202 in March 2019. Over this period, the rate of inflation as measured by the rate of change of the CPI was . True or False: When one calculates a single rate of inflation using the CPI for "All Items," it means that all categories of goods and services experienced the same rate of price change over that period. True False

Answer 1

Answer:

This is True because, when one calculates the rate of inflation by applying the CPI for All items, it does not really mean that all groups of services and goods have the same price rate change over the period.

Explanation:

Solution

Given that:

The Rate of inflation = ((254.202 - 249.554) / 249.554)*100 = 1.86%.

Now,

The rate of inflation measured by the rate of change of CPI was 1.86%.

True. It is right  since when one calculates a single rate of inflation using the CPI for “All items”, it does not really mean that all types of goods and services experienced the same rate of price change over the period. It is almost the average of increase in prices of “All items” in the given period.