The inflation rate can be measured as
A) the change in the average price level from one year to the next.
B) the change in the implicit price deflator from one year to the next.
C) the annual percentage change in the implicit price deflator from one year to the next.
D) the change in the consumer price index from one year to the next.

Question

Quizplus · Accepted Answer

The annual percentage change in the implicit price deflator from one year to the next is the best measure of the inflation rate. The implicit price deflator is adjusted for changes in the composition of output, whereas the consumer price index only measures changes in prices of goods and services consumed by households. Additionally, using the annual percentage change allows for easier comparison and analysis of inflation rates over multiple years.

The Inflation Rate Can Be Measured as