What is the core inflation rate and how does it differ from the ...

[wrbasek0]

What is the core inflation rate and how does it differ from the overall CPI inflation rate?
 
  What will be an ideal response?

Question 2

One of the most widely followed stock indexes in the United States is the S&P 500. This index represents
 
  A) the stock prices of the 500 most valuable firms worldwide.
  B) the stock prices of more than 4,000 U.S. firms.
  C) the stock prices of 500 large U.S. firms.
  D) the stock prices of 30 large U.S. corporations.

[cassie_ragen]

Answer to Question 1

The core inflation rate is the rate of increase in the core PCE deflator. The core PCE deflator is the personal consumption expenditure deflator excluding food and fuel The Federal Reserve believes that food and fuel prices are more volatile than other prices and largely respond to factors other than the state of inflation in the general economy. Accordingly, the core inflation rate is smoother, that is, less volatile than the actual inflation rate.

Answer to Question 2

C