ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Consumers and producers in free-enterprise system communicate through the price system.-prices are the way producers tell consumers how much it costs to produce and distribute a good or service. Prices of resources tell producers how much they must pay to make their products.

Detailed explanation-2: -The higher the price, the more suppliers are likely to produce. Conversely, buyers tend to purchase more of a product the lower its price. The equation that spells out the quantities consumers are willing to buy at each price is called the demand curve.

Detailed explanation-3: -The CPI includes only components of personal consumption that are directly paid for by the consumer, whereas the PPI for personal consumption includes components of personal consumption that are not paid for by the consumer.

Detailed explanation-4: -There are two inflationary measures in our economy, the Consumer Price Index (CPI) and the Producer Price Index (PPI). CPI is a measure of the total value of goods and services consumers have bought over a specified period, while PPI is a measure of inflation from the perspective of producers.

Detailed explanation-5: -The Granger causality test showed that there was One-way transmission CPI to PPI. To the conduction mechanism, the lag of conduction time is about 1-3 months [4]; Xu Weikang (2010) used the same data as the He Liping to find the Granger reason for each other in the short and long term [5] .