The Index Most Widely Used by the Government and the Private

question 112

Multiple Choice

The index most widely used by the government and the private sector to measure changes in the cost of living is the

• A) Producer Price Index.
• B) Consumer Price Index.
• C) the GDP deflator.
• D) the chain-weighted price index.

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Definitions:

Unemployment Insurance

A government program that provides financial assistance to unemployed workers who have lost their jobs through no fault of their own.

Automatic Stabilizers

Economic policies and programs that automatically adjust to counteract economic fluctuations without the need for government intervention.

Business Cycle

The fluctuations in economic activity that an economy experiences over a period of time, marked by periods of expansion and contraction in GDP.

Fiscal Drag

The negative effect on disposable income and aggregate demand when taxes do not fall in line with inflation, effectively increasing the tax burden.