Question

Gabby and Gus Malloy recently got pre-approved on a loan for their first house purchase. They are speculating on how much they should bid on their number one choice -a small, three-bedroom bungalow near a major college town. Which of the following indicators may be an important factor in whether they are able to successfully put in a low bid?
A. The federal tax rate in that area
B. The unemployment rate in that area
C. The producer's price index in that area
D. The CMI - consumer's marginal index

Answer 1

Answer:

The correct answer is C. The producer's price index in that area.

Explanation:

The producer price index (PPI) is an indicator of the evolution of producer sales prices, corresponding to the first marketing or distribution channel of goods traded in the economy. The difference with the consumer price index (CPI) is explained because a good can be marketed or distributed by different intermediaries that will modify the sales price until it reaches the final consumer.