The Chained Consumer Price Index (CPI)tends to Be

question 140

Multiple Choice

The chained consumer price index (CPI) tends to be

• A) a better measure of prices than the traditional CPI,no matter what the circumstances.
• B) a better measure of prices than the traditional CPI,but only if inflation is relatively high.
• C) a better measure of prices than the traditional CPI,but only if inflation is relatively low.
• D) equally as good as the traditional CPI,under all conditions.
• E) a poor measure of prices but better than the gross domestic product (GDP)deflator.

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Definitions:

Short Run

A period in economic analysis where at least one factor of production is fixed, leading to limited adjustments in production or operation.

Long-Run Phillips Curve

A graph showing that, in the long term, there is no trade-off between inflation and unemployment, suggesting the relationship is vertical.

Long-Run Aggregate Supply

The total output of goods and services that an economy can produce when it is using all of its resources efficiently and at full employment.

Vertical

In economics, this term typically refers to a market structure where companies provide different, but related, products or services at various stages of production.