i. An index is a convenient way of comparing changes for different variables, i.e., average income and food prices. ii. The concept of real income is sometimes called deflated income.
iii. Purchasing power of the dollar is the same as the CPI.
A) (i), (ii), and (iii) are all correct statements.
B) (i) and (ii) are correct statements but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (ii) and (iii) are correct statements but not (i).
E) (i), (ii), and (iii) are all false statements.

Question

Quizplus · Accepted Answer

Statement (i) correctly describes the use of an index for comparing variables, and statement (ii) is accurate in identifying real income as deflated income. However, statement (iii) is incorrect because the purchasing power of the dollar is not the same as the CPI. The CPI measures changes in the prices of a basket of goods and services, while purchasing power refers to the amount of goods and services that can be purchased with a unit of currency.

I an Index Is a Convenient Way of Comparing Changes