E3 UQuestion 5For each of the following statements, determine if it is true of false.(a) When real wages rise, we can conclude that the economy is experiencing a deflation.[Select](b) If prices of 60 percent of the goods and services in the consumption basket increase and prices of40 percent of goods and services in the basket decrease, CPI will definitely go up.[Select](c) When GDP deflator rises, CPI may go up, go down or remain unchanged.[Select](d) When CPI falls, we can conclude that the economy is experiencing a deflation.[Select](e) The weight of good A in the consumption basket is 20 percent. The weight of good B in theconsumption basket is 5 percent. If the price of good Arises by 10 percent and the price of good Bfalls by 10 percent, CPI will rise if everything else remains the same. [Select]f) When inflation occurs and nominal wages rise, real wages definitely fall.[Select]

Real income, also known as real wages, is the amount of money earned by an individual after the…

For each of the following statements, determine if it is true of false. When real wages rise, we can conclude that the economy is experiencing a deflation. [Select] (b) If prices of 60 percent of the goods and services in the consumption basket increase and prices 40 percent of goods and services in the basket decrease, CPI will definitely go up. [Select] When GDP deflator rises, CPI may go up, go down or remain unchanged. [Select]