The Federal Reserve focuses on the inflation rate based on the ________ rather than the CPI; to measure the underlying trend in inflation,it focuses on the ________.
A)GDP deflator; overall GDP deflator
B)GDP deflator; core GDP deflator
C)PCE price index; core PCE price index
D)PCE price index; overall PCE price index

Question

Quizplus · Accepted Answer

The Federal Reserve focuses on the Personal Consumption Expenditures (PCE) price index rather than the Consumer Price Index (CPI) to measure the inflation rate. To measure the underlying trend in inflation, it focuses on the core PCE price index, which excludes volatile food and energy prices.

The Federal Reserve Focuses on the Inflation Rate Based on the ________