A price index is a measurement showing how the average price of a bundle of goods changes over time. Option A describes inflation while option C describes deflation. Option B is a correct definition of a Consumer Price Index (CPI), which is a type of price index.

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A Price Index Is

Question 137

Multiple Choice

A price index is:

A) a sustained increase in the overall price level.
B) a measurement showing the cost of a bundle of goods at a point in time.
C) a decrease in the overall price level.
D) a measurement showing how the average price of a bundle of goods changes over time.

Correct Answer: