Which Statement About the PPI Is True

question 31

Multiple Choice

Which statement about the PPI is true?

• A) The PPI is a good predictor of future consumer prices because increases in input prices eventually make it back to consumers.
• B) The PPI is more stable than the CPI over time.
• C) The PPI only measures the changes of input prices for firms that manufacture goods abroad.
• D) The PPI is the main indicator used by the Federal Reserve to track changes in the price level.

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Definitions:

Dishonored Note

A promissory note that has not been paid by the maker at the maturity date.

360-Day Year

An accounting convention that simplifies interest calculations by assuming each month has 30 days, totaling 360 days for the year.

Interest Calculation

The process of determining the charge for the use of borrowed funds or the return on invested funds, typically expressed as an annual percentage rate.

Accrued Interest

Interest that has been incurred but not yet paid or received.