The price level in any year _____
A) reflects aggregate output measured in dollars of constant purchasing power.
B) is an index number that compares average prices that year with average prices in some base year.
C) always represents a higher number than the base year index.
D) represents the relationship between the economy's price level and aggregate output demanded
E) represents the relationship between the economy's price level and real GDP.

Question

Quizplus · Accepted Answer

The price level in any year is usually measured by an index number that compares average prices that year with average prices in some base year. This is done to account for inflation and changes in purchasing power. Therefore, choice B is the correct answer.

The Price Level in Any Year _____