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8 5 points Changes in the CPI from month to month help economists the economy's inflation rate. True False Previous

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8
5 points
Changes in the CPI from month to month help economists	the economy's inflation rate.
True
False
Previous

8 5 points Changes in the CPI from month to month help economists the economy's inflation rate. True False Previous

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JamesMaster · Tutor for 5 years

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<p> True</p>

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<p> The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living.<br /><br />Inflation is defined as the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.<br /><br />The statement in the question is about the relationship between changes in the CPI and the measurement of a country's inflation rate. Indeed, changes in the CPI from month to month are a primary tool used by economists to measure the economy's inflation rate. When the CPI rises, it indicates an increase in inflationary pressures in the economy because it means that the average price of consumer goods and services has increased. Conversely, a falling CPI suggests deflationary pressures.<br /><br />Therefore, the statement "Changes in the CPI from month to month help economists measure the economy's inflation rate" is true, as it accurately reflects the role of the CPI in measuring inflation.</p>
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