Anita Job is the new Treasury Secretary, and she is trying to interpret the inflation measures for two consecutive years. In year one, the aggregate price level increased by 9 % and, in year two, the aggregate price level increased by 5 %. Which term describes the change in the price level from year one to year two?

Question

Dean Haynes

Business

10 March, 14:39

Anita Job is the new Treasury Secretary, and she is trying to interpret the inflation measures for two consecutive years. In year one, the aggregate price level increased by 9 % and, in year two, the aggregate price level increased by 5 %. Which term describes the change in the price level from year one to year two?

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Answers (1)

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Giancarlo Campbell · Answer 1

Anita uses Consumer Price Index (CPI) as the term to describe the change in the price level from year one to year two.

Explanation:

Since Inflation is measured as the rate of change of those prices from 9% in year 1 to 5% in year 2. The most well-known indicator of inflation is the Consumer Price Index (CPI), which measures the percentage change in the price of a basket of goods and services consumed by households.

Therefore, 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