Which of the following price indices comes closest to measuring the cost of living of the typical household?
A)GDP deflator
B)producer price index
C)consumer price index
D)household price index

Question

Quizplus · Accepted Answer

The Consumer Price Index (CPI) measures the average changes in prices that consumers pay for a basket of goods and services. It includes a wide range of goods and services purchased by households, such as food, housing, transportation, and medical care. Therefore, it comes closest to measuring the cost of living of the typical household. The GDP deflator measures the price changes of all goods and services produced in an economy, including those that are not purchased by households. The producer price index measures the changes in prices received by domestic producers of goods and services. The household price index is not a commonly used index.

Which of the Following Price Indices Comes Closest to Measuring