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

question 10

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 are inelastic goods 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.

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Definitions:

Volume Variance

The difference between the expected and actual sales volumes, impacting revenue and expenses.

Manufacturing Overhead

All indirect costs associated with manufacturing a product, such as factory maintenance, utilities, and quality control.

DLH

The hours of work performed by workers directly involved in the manufacturing process, serving as a basis for allocating labor costs.

Volume Variance

The difference between the expected volume of production or sales and the actual volume, affecting costs or revenues.