Question

A price index is: Multiple Choice the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period. a comparison of the current price of a market basket to a fixed point of reference. a comparison of real GDP in one period relative to another. a ratio of real GDP to nominal GDP.

Answer 1

Answer:

a comparison of the current price of a market basket to a fixed point of reference.

Explanation:

A price index measures how prices change over time. It is a measure of inflation. It compares the current price of a market basket to a fixed point of reference or a base point.

Inflation is a persistent rise in the general price levels

types of price indexes

1. Producer price index measures the goods and services produced. this would not increase because it is used cars that is being examined

2. The consumer price index measures the changes in price of a basket of good. It is used to measure inflation. Because the price of price of used cars and trucks in US has increased , the CPI would increase

CPI = (cost of basket of goods in current period / cost of basket of goods in base period) x 100