Which of the following indices best signals future movements in retail prices?
A)The implicit GDP deflator
B)nominal GDP
C)The consumer price index
D)The producer price index
E)The measure of economic welfare (MEW)

Question

Quizplus · Accepted Answer

The producer price index (PPI) measures the average changes in prices received by domestic producers for their output, and can indicate future movements in retail prices as producers' cost increases may be passed on to consumers in the form of higher prices. The other indices (implicit GDP deflator, nominal GDP, consumer price index, and measure of economic welfare) may provide information on price changes but are not as closely linked to future movements in retail prices as the PPI.

Which of the Following Indices Best Signals Future Movements in Retail