The ________ Is a Measure of the Price Level and Is

question 258

Multiple Choice

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

• A)CPI; real GDP; nominal GDP
• B)GDP deflator; real GDP; nominal GDP
• C)GDP deflator; nominal GDP; real GDP
• D)PPI; nominal GDP; real GDP
• E)PPI; real GDP; nominal GDP

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Definitions:

Base Year

A specific year against which economic or financial data is measured and compared.

Chain-Weighted Index

An economic measure that accounts for changes in both prices and quantities of goods and services over time, adjusting the weightings to better reflect reality.

Laspeyres Index

A price index used to measure the change in the cost of acquiring a fixed basket of goods and services of the same type and quantity over time.

Paasche Index

A price index that measures the cost of purchasing a given market basket of goods and services in a certain year, compared to the cost of purchasing the same goods and services in a base year, with the quantities used in weighting the prices coming from the year of interest rather than the base year.