Because Increases in Input Prices Eventually Make It to Consumers

question 58

Multiple Choice

Because increases in input prices eventually make it to consumers when they buy the final product, the PPI:

• A) is considered a good predictor of future consumer prices.
• B) is a lag variable for inflation.
• C) accounts for inflation before it reaches consumers, adjusting the CPI downward.
• D) accounts for inflation before it reaches consumers, adjusting the CPI upward.

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Definitions:

Scrambled Merchandising

A retailing practice where stores carry a wide variety of product lines, often unrelated, to attract a broader customer base.

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Large retail stores that combine a supermarket and a department store, offering a wide range of food and non-food items under one roof.

Evolutionary Psychology

A theoretical approach in psychology that examines the ways in which human psychological traits and behaviors are shaped by evolutionary forces.

Evolutionary Theory

A scientific theory which explains how organisms change over generations through the processes of natural selection and genetic variation.