Measuring the Rate of Inflation Using a Market Basket That

question 16

Multiple Choice

Measuring the rate of inflation using a market basket that excludes 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.