Which measure of inflation best reflects underlying trends in the economy?
A) Core inflation
B) Headline inflation
C) The Producer Price Index
D) The GDP deflator

Question

Quizplus · Accepted Answer

Core inflation excludes volatile goods and services, such as food and energy, which can be subject to temporary supply shocks. This measure better reflects the underlying trends in the economy, as it focuses on changes in prices that are more closely linked to ongoing demand and supply dynamics.

Which Measure of Inflation Best Reflects Underlying Trends in the Economy