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22. Use your knowledge of price indexes to answer the following three-part question 22a. An index...

22. Use your knowledge of price indexes to answer the following three-part question

22a. An index of prices of all domestically produced goods in the economy is the

         a. Consumer Price Index. b. GDP Chain Price Index.

         c. Producer Price Index. d. Wholesale Price Index.

22b. The most comprehensive (inclusive of goods) measure of the rate at which prices are changing is:

         a. the CPI

         b. the balance-of-payments index.

         c. the GDP Chain Price Index.

d. Inflationary Gap and Fiscal Policy.

   e. The index of wage


22c. An inflation rate that tends to be a leading indicator of future inflation rates is the:

         a. Consumer Price Index b. Producer Price Index

         c. GDP deflator d. Retail Price Index

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Answer #1

22a. Ans: Consumer Price Index.

Explanation:

CPI measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households. Calculation of CPI includes all domestically produced goods in the economy.

22b. Ans: The CPI

22c. Ans: Producer Price Index

Explanation:

A producer price index is a price index which measures the average changes in prices received by domestic producers for their output. The Producer Price Index is considered to be a leading indicator of future inflation rates.

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