When Comparing the Annual Inflation Rate in the United States

question 35

Multiple Choice

When comparing the annual inflation rate in the United States based on the CPI with the annual inflation rate based on the PCE price index,the data show that the

• A)CPI measure tends to exceed the PCE price index measure.
• B)PCE price index measure tends to exceed the CPI measure.
• C)CPI measure and the PCE price index measure are equal.
• D)CPI measure and PCE price index measure move in opposite directions.
• E)CPI deflator and PCE price index cannot be compared because they measure prices of different baskets of goods and services.

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