Measuring the Rate of Inflation Using a Market Basket That

question 32

Multiple Choice

Measuring the rate of inflation using a market basket that excludes some volatile components of the CPI such as food and energy prices is preferred by some analysts because this measure, called core inflation,

• A)provides a real, rather than a nominal, rate of inflation.
• B)gives a better measure of ongoing, sustained price changes.
• C)is more consistent with measures of inflation used in other countries.
• D)fluctuates more than measures of inflation that include food and energy prices.

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