Answer to Question #80796 in Macroeconomics for AYANDA

Question

Which of the following statements regarding definition and measurement of inflation is/are correct?

1) The consumer price index (CPI) is directly related to the cost of living
2) The producer price index (PPI) measures the cost of living rather than the cost of production
3) The continuous increase in the price of crude oil is an example of inflation
4) The consumer price index (CPI) is an index of the prices of all the consumer goods and services

Answer 1

The correct statements are:
1) The consumer price index (CPI) is directly related to the cost of living.
4) The consumer price index (CPI) is an index of the prices of all the consumer goods and services.