A price index is:
A) a sustained increase in the overall price level.
B) a measurement showing the cost of a bundle of goods at a point in time.
C) a decrease in the overall price level.
D) a measurement showing how the average price of a bundle of goods changes over time.

Question

Quizplus · Accepted Answer

A price index is a measurement showing how the average price of a bundle of goods changes over time. Option A describes inflation while option C describes deflation. Option B is a correct definition of a Consumer Price Index (CPI), which is a type of price index.

A Price Index Is