A price index is designed to measure
A) changes in the general level of employment across time periods.
B) changes in the quantity of output produced across time periods.
C) the market value of output produced during the current period with the value of output produced during an earlier time period.
D) the cost of buying a market basket of goods at a point in time relative to the cost of buying the same market basket during an earlier time period.

Question

Quizplus · Accepted Answer

A price index is designed to measure the cost of buying a particular market basket of goods at a point in time relative to the cost of buying the same basket during a reference period. This is essentially what is measured by a consumer price index or CPI. It helps measure the inflation or deflation in the overall economy.

A Price Index Is Designed to Measure