Which of the following is false?
a. The most well known price index is the consumer price index, which provides a measure of the trend in the prices of goods and services purchased for consumption purposes.
b. The GDP deflator measures the average level of prices of all final goods and services produced in the economy.
c. The CPI is the price index that is most relevant to households trying to evaluate their changing financial position over time.
d. A price index is equal to the cost of the chosen market basket in the base year, divided by the cost of the same market basket in the current year, times 100.
Question 2
The current cost of a market basket of goods is 800 . The cost of the same basket of goods in the base year was 1,000 . The current price index is:
a. 120.
b. 100.
c. 80.
d. -20.
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