Asked by Mandalyns Watters on May 30, 2024
Verified
Changes in the consumer price index are useful in predicting changes in the producer price index.
Consumer Price Index
An index evaluating the weighted mean of the cost of a selection of consumer products and services, including elements like transportation, food, and healthcare, generally utilized to gauge inflation levels.
Producer Price Index
A financial metric that tracks the average variation over time in the selling prices domestic manufacturers obtain for their products.
- Acquire knowledge about the constituents and intent of the Consumer Price Index (CPI).
- Understand the effects of inflation and deflation on purchasing power and economic indicators.
Verified Answer
SB
Skylar BaileyJun 03, 2024
Final Answer :
False
Explanation :
The Consumer Price Index (CPI) and Producer Price Index (PPI) measure different sets of prices at different points in the supply chain. Changes in CPI, which measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, do not necessarily predict changes in PPI, which measures the average change over time in the selling prices received by domestic producers for their output. The two can move independently due to factors like changes in production costs, profit margins, and supply chain dynamics.
Learning Objectives
- Acquire knowledge about the constituents and intent of the Consumer Price Index (CPI).
- Understand the effects of inflation and deflation on purchasing power and economic indicators.