Which of the following statements about inflation is true?
A) The consumer price index (CPI) is a good way of measuring inflation.
B) Productivity decreases the purchasing power of consumer dollars.
C) Inflation increases the purchasing power of consumer dollars.
D) None of the above

Question

Quizplus · Accepted Answer

The consumer price index (CPI) is a widely used measure of inflation and reflects changes in the prices of goods and services purchased by consumers. B is incorrect because productivity actually increases the purchasing power of consumer dollars by increasing the supply of goods and services available. C is also incorrect because inflation reduces the purchasing power of consumer dollars over time as prices increase.

Which of the Following Statements About Inflation Is True