The Consumer Price Index

question 9

Multiple Choice

The consumer price index:

• A)tracks the value of output over time.
• B)is not tied to cost-of-living adjustments.
• C)doubles every five years in the economy.
• D)is a weighted average of consumer prices.
• E)is a broader price index measure than the implicit GDP deflator.

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Definitions:

Monetary Policy

The actions undertaken by a central bank, such as the Federal Reserve, to control the money supply and influence the economy's overall level of activity, inflation, and interest rates.

Fiscal Policy

Government adjustments to its spending levels and tax rates to influence a nation's economy.

Recession

A period of temporary economic decline during which trade and industrial activities are reduced, generally identified by a fall in GDP in two successive quarters.

TARP Bailout

The Troubled Asset Relief Program, a U.S. government program created in 2008 to purchase toxic assets and inject capital into banks to stabilize the financial system.