ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Consumer Price Index (CPI)
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Producer Price Index (PPI)
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Aggregate Price Level
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Inflation Rate
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Detailed explanation-1: -The market basket of goods and services that make up the Consumer Price Index (CPI) is divided into seven major groups, such as food and beverages or housing. The pattern of consumer expenditures at this level changes more slowly than the components within a group.
Detailed explanation-2: -The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas.
Detailed explanation-3: -To find the CPI in any year, divide the cost of the market basket in year t by the cost of the same market basket in the base year. The CPI in 1984 = $75/$75 x 100 = 100 The CPI is just an index value and it is indexed to 100 in the base year, in this case 1984. So prices have risen by 28% over that 20 year period.