The primary purpose of measuring the overall level of prices in the economy is to
A) allow for the measurement of GDP.
B) allow consumers to know what kinds of prices to expect in the future.
C) allow for the comparison of dollar figures from different points in time.
D) allow for the comparison of dollar figures from the same point in time.

Question

Quizplus · Accepted Answer

The primary purpose of measuring overall level of prices in the economy is to allow for the comparison of dollar figures from different points in time through the use of inflation measures like the Consumer Price Index (CPI) or the Producer Price Index (PPI). This allows us to see how much the buying power of a dollar has changed over time. It also helps economists and policymakers understand the state of the economy and make informed decisions about monetary and fiscal policy. It does not directly measure GDP, nor does it provide consumers with information about future prices.

The Primary Purpose of Measuring the Overall Level of Prices