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Economics · May / June 2018 · Paper 12 · Question 21

2281Inflation

What determines the weights in the consumer prices index (CPI)?

  1. Athe average income received by the various households
  2. Bthe average increase in the prices of the different goods
  3. Cthe proportion of income spent by the average household on particular goods
  4. Dthe proportion of income that the average household saves

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Correct answer: C. the proportion of income spent by the average household on particular goods

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