Final answer:
The Department of Labor, through the Bureau of Labor Statistics, is responsible for computing and reporting the Consumer Price Index (CPI), which is the most commonly cited inflation measure in the U.S. Option D is correct.
Step-by-step explanation:
The federal agency responsible for computing and reporting the Consumer Price Index (CPI) is the Department of Labor. The CPI is a measure of inflation that government statisticians at the U.S. Bureau of Labor Statistics calculate based on the price level from a fixed basket of goods and services that represents the average consumer's purchases. The Bureau of Labor Statistics avoids biases in the CPI by using the Consumer Expenditure Survey, which provides detailed information on spending habits across more than 200 item categories. This helps to create a basket of goods that is representative of the purchases of an average household.
It's important to differentiate between several other similar indicators of economic health: The Producer Price Index (PPI) measures the average change over time in the selling prices received by domestic producers for their output. The International Price Index measures changes in the prices of imports and exports. The Employment Cost Index focuses on the costs of labor for businesses in the U.S. economy. Finally, the GDP deflator is a measure of the price level for all goods and services included in Gross Domestic Product (GDP), whereas the CPI is limited to a basket of goods and services for consumers.