Question

If the cost of housing increases by 10 percent, then, other things the same, the CPI is likely to increase by about:(A) 10 percent.(B) 8.5 percent.(C) 6 percent.(D) 4 percent.

Answer 1

Answer:

correct option is (D) 4 percent

Explanation:

given data

cost of housing increases = 10 percent

to find out

CPI is likely to increase by

solution

as other thing  (CPI) Consume price index is likely to increase as

(CPI) Increase in Consume price index = 40 % of cost of housing increases  ...................1

so (CPI) Increase in Consume price index = 40 % of 10%

Increase in Consume price index = 4%

so correct option is (D) 4 percent