The measure that the Fed regards as the best guide to underlying inflation is the:
A) consumer price index.
B) wholesale price index.
C) core inflation rate.
D) federal funds rate.

Question

Quizplus · Accepted Answer

The core inflation rate is the measure of inflation that excludes volatile food and energy prices, which can fluctuate greatly and are not necessarily indicative of overall price trends. This allows the Fed to focus on the underlying inflation rate and make more informed decisions on monetary policy. The other options (consumer price index, wholesale price index, and federal funds rate) are not as appropriate for measuring underlying inflation.

The Measure That the Fed Regards as the Best Guide