Which of the Following Is True About the Comparison Between

question 5

Multiple Choice

Which of the following is true about the comparison between the CPI and the PPI?

• A) Both indices are based on the same basket of goods and services.
• B) Sales and excise taxes are included in the PPI, but they are not included in the CPI.
• C) The PPI is more commonly used to adjust wages for changes in the cost of living than the CPI.
• D) Unlike the CPI that uses prices people pay, the PPI uses the prices measured at the wholesale level.

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Definitions:

Intercept

In statistics and mathematics, the point at which a line crosses the y-axis in a graph, representing the value of the dependent variable when the independent variable is zero.

Error Term

The difference between observed values and estimated values in a statistical model.

Multicollinearity

A statistical phenomenon where two or more predictor variables in a multiple regression model are highly correlated, potentially distorting estimates.

Correlation Coefficient

The correlation coefficient is a statistical measure that calculates the strength and direction of the relationship between two variables, ranging from -1 to 1.