The Fed Uses a "Core" Price Index,one That Excludes Food

question 147

Multiple Choice

The Fed uses a "core" price index,one that excludes food and energy prices to measure inflation.It does so because

• A)food and energy have inelastic demand curves and consumers will buy them regardless of their price.
• B)it wants to avoid the blame for high gasoline prices causing inflation.
• C)food and energy prices have wide swings that are not related to the causes of general inflation.
• D)food and energy prices do not change all that much during the short run,so are irrelevant to the calculation of inflation.

Learn about the tools and outputs of human resource audits.

Know the process of balancing demand and supply in human resource planning.

Distinguish between replacement summaries and replacement charts.

Understand the difference between job descriptions and job specifications.

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Definitions:

Product's Price

The amount of money charged for a product or service, determined by various factors including cost of production, market demand, and competition.

Flexible Cost-plus Pricing

A pricing strategy where the selling price is determined by adding a specific markup to a product's variable costs, allowing flexibility in pricing.

Pricing Strategies

Tactics used by companies to determine the best price points for their products or services in order to maximize profits and market share.

Rigid Cost-plus Pricing

A pricing strategy where a fixed percentage is added to the total cost of producing a product to determine its selling price, without flexibility for market changes.