The Price Index That Measures the Cost of a Basket

question 132

Multiple Choice

The price index that measures the cost of a basket of goods and services bought by firms is called the

• A)industrial price index.
• B)producer price index.
• C)core price index.
• D)GDP deflator.

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Definitions:

Nominal Rate of Interest

The rate of interest before adjustments for inflation, reflecting the market rate at which money can be borrowed.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time, usually a year.

Usury Laws

Regulations governing the amount of interest that can be charged on a loan, designed to protect consumers from excessive rates.

Price Floors

A government- or group-imposed minimum price set above the equilibrium price, preventing market prices from dropping below it.