John complained to his buddy, Frank, that prices have increased a lot over the past year. Frank disagreed, saying that the prices of some goods have gone up a bit, but other prices have declined, noting that you can get some good buys on houses right now. Frank feels that the average price of consumer goods hasn't changed. Frank and John can refer to the __________ to learn how government economists currently view the price situation.
A) GDP
B) CPI
C) PPI
D) MEW

Question

Quizplus · Accepted Answer

The CPI (Consumer Price Index) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. This is the best indicator for Frank and John to determine the current price situation as it reflects changes in the prices of consumer goods. GDP (A) measures the value of goods and services produced in a country, not necessarily prices. PPI (C) measures the average changes in prices received by domestic producers for their output, not necessarily consumer prices. MEW (D) is not a recognized economic indicator.

John Complained to His Buddy, Frank, That Prices Have Increased