The Consumer Price Index (CPI) CPI-U : Integrated Reasoning (IR)
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# The Consumer Price Index (CPI) CPI-U

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The Consumer Price Index (CPI) CPI-U [#permalink]

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07 Dec 2012, 12:32
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The Consumer Price Index (CPI) measures the average prices of goods and services purchased by consumers. In the United States, the CPI-U calculates the CPI for all urban consumers.

The CPI-U is calculated based on prices of food, clothing, shelter, fuels, transportation fares, charges for doctors and dentists' services, drugs, and other goods and services that people buy for day-to-day living. All taxes directly associated with the purchase and use of items (such as, in the United States, sales taxes) are included in the index. An increase in CPI-U by a certain fractional amount means an increase by that fractional amount in overall prices within the relevant category.

For analyzing general price trends in the economy, seasonally adjusted prices are usually preferred over unadjusted prices because adjusting eliminates the effect of changes that normally occur at the same time and in about the same magnitude every year—such as price movements resulting from climatic conditions, production cycles, model changeovers, and holidays.

For each of the following, select Yes if the statement is inferable from the given information. Otherwise select No.

Percent Changes in CPI for All Urban Consumers (CPI-U), US City Average
Yes No
The changes in seasonally adjusted prices for used cars and trucks between March 2010 and September 2010 were in most cases less in magnitude than the changes in seasonally adjusted prices of new vehicles for the same period.
The seasonally adjusted CPI-U for all items was higher in March 2010 than in the previous month.
The seasonally unadjusted change in the price of new vehicles in August 2010 over the previous month was about the same as the seasonally unadjusted change in the price of food away from home over the same period.
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08 Dec 2012, 20:35
How can we find the seasonly unadjusted price for Aug 2010 , its only given for September ?
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18 Feb 2013, 11:33
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The changes in seasonally adjusted prices for used cars and trucks between March 2010 and September 2010 were in most cases less in magnitude than the changes in seasonally adjusted prices of new vehicles for the same period.

Lets check the first question.
It talks about the seasonally adjusted values for used cars and trucks and those for new vehicles. So, we need to only look at 2 rows(new vehicles and used cars and trucks)and all columns between March 2010 and September 2010(7 months). We are asked whether the for the majority of months, seasonally adjusted values for old cars and trucks is lesser than those for new vehicles. Since it talks about majority, we need to tabulate or compare values till we get upto 4 yeses or nos. Let's quickly tabulate that

New Vehicles Used cars and trucks
March 2010 0.1 < 0.5 No
April 2010 0.0 < 0.2 No
May 2010 0.1 < 0.6 No
June 2010 0.1 < 0.9 No

Since, we have got four nos, we know that for the majority of months the answer is no. Since, we cannot infer the statement in question, the answer is no for this question.

2. The seasonally adjusted CPI-U for all items was higher in March 2010 than in the previous month.

This one asks us whether the seasonally adjusted values for all items in March 2010 was higher than Feb 2010. Now, we are not given the values for feb 2010. However, we know that at the top of the table it is mentioned that the Seasonally adjusted values given change from preceding month. Hence, the seasonally adjusted value for March 2010 is calculated from Feb 2010 and hence we just need to note whether the change for all items (the topmost row in the table) is positive for March 2010. It turns out it is(value=0.1). Since we can infer the statement in question, the answer is Yes.

3. The seasonally unadjusted change in the price of new vehicles in August 2010 over the previous month was about the same as the seasonally unadjusted change in the price of food away from home over the same period.

This one is tricky. It needs us to look for the seasonally unadjusted value which is the last column here. However, it wants us to compare the last column price change for new vehicles in august over preceding month with the last column price change of food away from home in the same period. We are not given this data and thus we cannot test the validity of this statement from the given data. Note here, we are not asked to confirm whether the data is right or not. We are asked to confirm whether the data can be inferred from the given data or not. Since, we cannot infer the data from the given information, the answer is no.

Let me know if this is clear or if you have any further doubts.

chris93 wrote:
http://www.kaogmat.com/ir/4340.html

The Consumer Price Index (CPI) measures the average prices of goods and services purchased by consumers. In the United States, the CPI-U calculates the CPI for all urban consumers.

The CPI-U is calculated based on prices of food, clothing, shelter, fuels, transportation fares, charges for doctors and dentists' services, drugs, and other goods and services that people buy for day-to-day living. All taxes directly associated with the purchase and use of items (such as, in the United States, sales taxes) are included in the index. An increase in CPI-U by a certain fractional amount means an increase by that fractional amount in overall prices within the relevant category.

For analyzing general price trends in the economy, seasonally adjusted prices are usually preferred over unadjusted prices because adjusting eliminates the effect of changes that normally occur at the same time and in about the same magnitude every year—such as price movements resulting from climatic conditions, production cycles, model changeovers, and holidays.

For each of the following, select Yes if the statement is inferable from the given information. Otherwise select No.

Percent Changes in CPI for All Urban Consumers (CPI-U), US City Average
Yes No
The changes in seasonally adjusted prices for used cars and trucks between March 2010 and September 2010 were in most cases less in magnitude than the changes in seasonally adjusted prices of new vehicles for the same period.
The seasonally adjusted CPI-U for all items was higher in March 2010 than in the previous month.
The seasonally unadjusted change in the price of new vehicles in August 2010 over the previous month was about the same as the seasonally unadjusted change in the price of food away from home over the same period.
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11 Mar 2013, 14:26
Thanks alot Kris. This was a tricky one especially the second part.
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Re: The Consumer Price Index (CPI) CPI-U [#permalink]

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26 Apr 2013, 15:19
The thing that bothers me with question like the third one, is when they ask, "was about the same".

What qualifies as "about the same"? 10% 20%?

How should we approach the subjective and ambiguous term, "about the same"? Or something simliar like, " slighty more/less"?
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Re: The Consumer Price Index (CPI) CPI-U [#permalink]

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27 Apr 2013, 08:00
Hi Hitman,

It's actually a clue that the answer is likely to be false... as you say it's hard to work out exactly what that means...

In this instance read the question carefully. It's asking about 'unadjusted' prices - but all the monthly data we ahve is for 'adjusted' so we can;t have enough info.

So in this instance, we don't need to stress about what counts as about the same...

James
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28 Apr 2013, 08:03
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I find this question to be especially annoying because of part 2:

2. The seasonally adjusted CPI-U for all items is higher in March 2010 than it is in the preceding month.

In the question, all items means "average", rather than "each of the items". This is clarified only by the existence of a separate table row with the name "All Items".

You need to stop and check every detail of the table to infer the meaning of all items, and I feel there is not enough time in the exam to do that.
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Re: The Consumer Price Index (CPI) CPI-U [#permalink]

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30 Aug 2013, 09:17
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Kris01 wrote:
The changes in seasonally adjusted prices for used cars and trucks between March 2010 and September 2010 were in most cases less in magnitude than the changes in seasonally adjusted prices of new vehicles for the same period.

Lets check the first question.
It talks about the seasonally adjusted values for used cars and trucks and those for new vehicles. So, we need to only look at 2 rows(new vehicles and used cars and trucks)and all columns between March 2010 and September 2010(7 months). We are asked whether the for the majority of months, seasonally adjusted values for old cars and trucks is lesser than those for new vehicles. Since it talks about majority, we need to tabulate or compare values till we get upto 4 yeses or nos. Let's quickly tabulate that

New Vehicles Used cars and trucks
March 2010 0.1 < 0.5 No
April 2010 0.0 < 0.2 No
May 2010 0.1 < 0.6 No
June 2010 0.1 < 0.9 No

Since, we have got four nos, we know that for the majority of months the answer is no. Since, we cannot infer the statement in question, the answer is no for this question.

2. The seasonally adjusted CPI-U for all items was higher in March 2010 than in the previous month.

This one asks us whether the seasonally adjusted values for all items in March 2010 was higher than Feb 2010. Now, we are not given the values for feb 2010. However, we know that at the top of the table it is mentioned that the Seasonally adjusted values given change from preceding month. Hence, the seasonally adjusted value for March 2010 is calculated from Feb 2010 and hence we just need to note whether the change for all items (the topmost row in the table) is positive for March 2010. It turns out it is(value=0.1). Since we can infer the statement in question, the answer is Yes.

3. The seasonally unadjusted change in the price of new vehicles in August 2010 over the previous month was about the same as the seasonally unadjusted change in the price of food away from home over the same period.

This one is tricky. It needs us to look for the seasonally unadjusted value which is the last column here. However, it wants us to compare the last column price change for new vehicles in august over preceding month with the last column price change of food away from home in the same period. We are not given this data and thus we cannot test the validity of this statement from the given data. Note here, we are not asked to confirm whether the data is right or not. We are asked to confirm whether the data can be inferred from the given data or not. Since, we cannot infer the data from the given information, the answer is no.

Let me know if this is clear or if you have any further doubts.

The Consumer Price Index (CPI) measures the average prices of goods and services purchased by consumers. In the United States, the CPI-U calculates the CPI for all urban consumers.

The CPI-U is calculated based on prices of food, clothing, shelter, fuels, transportation fares, charges for doctors and dentists' services, drugs, and other goods and services that people buy for day-to-day living. All taxes directly associated with the purchase and use of items (such as, in the United States, sales taxes) are included in the index. An increase in CPI-U by a certain fractional amount means an increase by that fractional amount in overall prices within the relevant category.

For analyzing general price trends in the economy, seasonally adjusted prices are usually preferred over unadjusted prices because adjusting eliminates the effect of changes that normally occur at the same time and in about the same magnitude every year—such as price movements resulting from climatic conditions, production cycles, model changeovers, and holidays.

For each of the following, select Yes if the statement is inferable from the given information. Otherwise select No.

Percent Changes in CPI for All Urban Consumers (CPI-U), US City Average
Yes No
The changes in seasonally adjusted prices for used cars and trucks between March 2010 and September 2010 were in most cases less in magnitude than the changes in seasonally adjusted prices of new vehicles for the same period.
The seasonally adjusted CPI-U for all items was higher in March 2010 than in the previous month.
The seasonally unadjusted change in the price of new vehicles in August 2010 over the previous month was about the same as the seasonally unadjusted change in the price of food away from home over the same period.
[/quote]

Hi Kris...i have a doubt.
For the question 1 ......you say that the answer should be NO because the Answer of Inference in False...so you stated that Answer should be NO
BUT IN CONTRAST.....for marking the Answer of question 2......you only saw whether the statement can be Inferred or Not......since the statement could be inferred ...you marked YES. (but then the answer of Inference was NO.....because seasonally adjusted CPI-U for ALL items was NOT higher in March 2010 than in the previous month.)

...so i believe this is the wrong approach.

Now what i understood after studying the question thoroughly is -

Firstly, the question is asking whether the statement can be INFERRED or NOT......i don't think so the question is asking whether the statement is True or Not.
Now you would ask.....if the question is only asking, whether the statement can be inferred or not......then HOW would the Answer for question 1 would be NO..

now see....the Table clearly states that the Changes mentioned are only PERCENTAGE changes.......whereas the question 1 is asking "THE CHANGES in seasonally adjusted prices for used cars and trucks between March 2010 & Sept 2010 WERE in most cases LESS IN MAGNITUDE..."

so the question is asking regarding the CHANGES IN MAGNITUDE.....i.e. Absolute Value.....& since we cannot Infer whether the changes in Absolute values are less or more (since the table is only showing Percentage change).....so the answer is NO

Please clarify whether my thinking is correct or not.......i have my GMAT in 2 days
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Re: The Consumer Price Index (CPI) CPI-U [#permalink]

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31 Aug 2013, 07:07
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Hey laveen,
I found the link to this problem, check it out http://www.manhattangmat.com/blog/index ... -analysis/
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Re: The Consumer Price Index (CPI) CPI-U [#permalink]

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24 Feb 2016, 09:36
stormbind wrote:
I find this question to be especially annoying because of part 2:

2. The seasonally adjusted CPI-U for all items is higher in March 2010 than it is in the preceding month.

In the question, all items means "average", rather than "each of the items". This is clarified only by the existence of a separate table row with the name "All Items".

I also interpreted the question as all items separately.
I don't think the question is clear, given that "all items" has a well established meaning in English. It's just poorly worded and I hope the test designers have learned from their mistake.
Re: The Consumer Price Index (CPI) CPI-U   [#permalink] 24 Feb 2016, 09:36
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