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Which index is commonly used to measure inflation? (2020)

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Question: Which index is commonly used to measure inflation? (2020)

Options:

  1. Consumer Price Index (CPI)
  2. Producer Price Index (PPI)
  3. Gross Domestic Product Index (GDPI)
  4. Employment Price Index (EPI)

Correct Answer: Consumer Price Index (CPI)

Exam Year: 2020

Solution: 

The Consumer Price Index (CPI) is commonly used to measure inflation by tracking changes in the price level of a basket of consumer goods and services.

Which index is commonly used to measure inflation? (2020)

Practice Questions

Q1
Which index is commonly used to measure inflation? (2020)
  1. Consumer Price Index (CPI)
  2. Producer Price Index (PPI)
  3. Gross Domestic Product Index (GDPI)
  4. Employment Price Index (EPI)

Questions & Step-by-Step Solutions

Which index is commonly used to measure inflation? (2020)
  • Step 1: Understand what inflation means. Inflation is when prices of goods and services increase over time.
  • Step 2: Learn about the Consumer Price Index (CPI). The CPI is a tool that helps measure how much prices are changing.
  • Step 3: Know that the CPI looks at a specific group of items that people commonly buy, like food, clothing, and housing.
  • Step 4: Realize that by tracking the prices of these items over time, the CPI shows how much inflation is happening.
  • Step 5: Conclude that the CPI is the index commonly used to measure inflation.
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