A monthly price index that describes the changes in prices from one period to another for a "market basket" of goods and services is known as the ______________.
A) Laspeyres index
B) deflator index
C) Consumer Price Index
D) Paasche index

Question

Quizplus · Accepted Answer

The Consumer Price Index (CPI) is a monthly price index that measures the changes in the prices of goods and services commonly consumed by households. It is computed by calculating the price changes in a fixed basket of goods and services (also known as the market basket) purchased by households over time. The other options, Laspeyres index and Paasche index, are also price indices, but they have different calculation methods and are not used as frequently as CPI. The deflator index refers to the ratio of nominal GDP to real GDP and is used to adjust economic output for inflation.

A Monthly Price Index That Describes the Changes in Prices