Question

The CPI will be most influenced by a 10 percent increase in the price of which of the following consumption categories?
a. housing
b. transportation
c. medical care
d. food and beverages
e. All of the above would produce the same impact.

Answer 1

The Consumer Price Index (CPI) is most influenced by categories that have larger weights in its calculation, primarily housing. Housing typically makes up the largest portion of the CPI basket. Therefore, a 10 percent increase in the price of housing would have a greater impact on the overall CPI compared to the other categories listed, which generally represent smaller portions of consumer expenditures.

So, the correct answer is:
**a. housing**