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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