Economists measure the price level

Question

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Economists measure the price level using a price index such as the Consumer Price Index (CPI) or Producer Price Index (PPI). These indices track the prices of a basket of goods and services over time, allowing economists to see how the overall level of prices is changing. Nominal GDP measures the value of all final goods and services produced in a country in a given year at current prices, while real GDP adjusts for inflation. The growth rate in the money supply is relevant for understanding changes in the economy's monetary policy, but it does not directly measure the price level.

Economists Measure the Price Level