Question

Consider that the CPI market basket includes two goods (X and Y), and the spending on...

Consider that the CPI market basket includes two goods (X and Y), and the spending on X constitutes 70% of the overall consumer spending, while the remainder is allocated to Y.

If the price of Y increases by 10% while the price of X decreases by 10% then, all else held constant,

The CPI increases

The CPI decreases

The CPI remains unchanged
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