A price index creates a measure of how many dollars it would take to maintain a constant purchasing power over time.

Question

Quizplus · Accepted Answer

A price index calculates the relative price changes of goods and services over time, allowing for adjustments in the effects of inflation. By tracking changes in the prices of a predetermined basket of goods and services, a price index helps to determine the extent to which the purchasing power of a currency has risen or fallen over time.

A Price Index Creates a Measure of How Many Dollars