The major difference between the producer price index and the consumer price index is that the produce price index _____ and the consumer price index _____.
A)is based on retail prices; is based on wholesale prices
B)measures the cost of living of self-employed workers; measures the cost of living of salaried workers
C)generally registers a higher rate of inflation; generally registers a lower rate of inflation
D)is based on the cost of a basket typically purchased by producers; is based on the cost of a basket typically purchased by consumers

Question

Quizplus · Accepted Answer

The producer price index is based on the cost of a basket of goods typically purchased by producers or businesses. It measures the changes in prices of raw materials and other inputs that businesses use to produce their products. In contrast, the consumer price index is based on the cost of a basket of goods typically purchased by consumers. It measures the changes in prices of goods and services that consumers buy, such as food, housing, transportation, and healthcare. Therefore, the best choice is D, which correctly describes the difference between the two indexes.

The Major Difference Between the Producer Price Index and the Consumer