Which of the following is true about the consumer price index (CPI)and the GDP price index?
A)Both measures weigh prices by quantities consumed in some base year.
B)Both yield identical numbers for price level changes for any two years.
C)Both CPI and GDP price index underestimate changes in the price level in an economy.
D)The CPI measures changes in relative prices of goods,while the GDP price index measures changes in the absolute price level of a fixed basket of goods and services.
E)CPI includes products that are widely used,while GDP price index includes all goods and services.

Question

Quizplus · Accepted Answer

The CPI includes a fixed basket of goods and services typically purchased by households, while the GDP price index includes all goods and services produced domestically, reflecting a broader scope.

Which of the Following Is True About the Consumer Price