Question

Which of the following statements is true?

a. Deflation is an increase in the general level of prices.
b. The consumer price index (CPI) measures changes in the average prices of consumer goods and services.
c. Disinflation is an increase in the rate of inflation.
d. Real income is the actual number of dollars received over a period of time.
e. The real interest rate equals the nominal rate of interest plus the inflation rate.

Answer 1

The consumer price index (CPI) measures changes in the average prices of consumer goods and services.

Step-by-step explanation:

The correct statement is b. The consumer price index (CPI) measures changes in the average prices of consumer goods and services. The Consumer Price Index (CPI) is a measure of inflation that reflects the annual percentage change in the cost of acquiring a basket of goods and services for the average consumer. It is used to track changes in the prices of goods and services over time and is commonly cited as a measure of inflation.