Question

At the beginning of a year, decision makers expect the general level of prices to increase at a 5 percent annual rate. The CPI increases from 150 to 157.5 during the year; this indicates that_________

Answer 1

The Decision makers predicted accurately the general price level increase.

Explanation: CPI(consumer price index) is a macroeconomic measure that is used in some countries like the United States of America to measure the general changes in the average price level of a basket of Consumer goods and services rendered within an economy during a period under review.

WHEN DECISION MAKERS MAKE CERTAIN FUTURE FORCAST OR PREDICTION AND IT TURNS OUT TO BE TRUE WITHIN THE RANGE PREDICTED, IT MEANS THAT THEIR PREDICTION OR FORCAST WAS ACCURATE.