The Bank of Canada uses a "core" price index, one that excludes food and energy prices, to measure inflation.It does so because
A)food and energy are inelastic goods and consumers will buy them regardless of their price.
B)it wants to avoid the blame for high gasoline prices causing inflation.
C)food and energy prices have wide swings that are not related to the causes of general inflation.
D)food and energy prices do not change all that much during the short run, so are irrelevant to the calculation of inflation.
E)food and energy make up a very small portion of the spending done by Canadian households.

Question

Quizplus · Accepted Answer

Food and energy prices can have wide swings due to factors such as weather or geopolitical events, which are not directly related to the general trend of inflation caused by monetary policy or economic growth. Excluding them from the core price index provides a more stable and reliable measure of underlying inflationary pressures.

The Bank of Canada Uses a "Core" Price Index, One