Answer to Question #218358 in Economics for Andie

Question

4.14 Which one of the following statements regarding the producer price index (PPI) is true?

[1] It measures the cost of living.

[2] It measures the cost of production.

[3] It has the same weights as CPI.

[4] Its growth rate is always greater than that of CPI.

Answer 1

The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services.

So, the correct answer is [3].