The Producer Price Index Is Considered a Good Predictor of Future

question 67

Multiple Choice

The producer price index is considered a good predictor of future consumer prices because increases in input prices:

• A) eventually make it to consumers when they buy the final product.
• B) are accounted for in PPI, and therefore this automatically adjusts the CPI.
• C) are observed first in the PPI, adjusting the CPI downward.
• D) are used by consumers to make decisions on what to buy.

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Definitions:

Population Mean

The average of a set of numerical values obtained from every member of a population.

Robust Estimator

A statistical method or measure that is not unduly affected by outliers or deviations from assumptions in the underlying data distribution.

Nonnormality

The deviation from the normal distribution in a set of data, where the data does not follow a bell-curve shape.

Mound-Shaped

A description of a symmetrical, bell-shaped distribution often associated with the normal distribution.