Final answer:
The Producer Price Index (PPI) measures the average change over time in the selling prices by producers, and its basket typically represents goods and services sold by producers (option c). It includes prices paid for supplies and inputs by producers, providing an indicator of inflation from the producer's perspective.
Step-by-step explanation:
The Producer Price Index (PPI) measures the average change over time in the selling prices received by domestic producers for their output. The basket of goods and services in the PPI typically represents goods and services as sold by producers. Therefore, the basket captures prices paid for supplies and inputs by producers of goods and services. It allows us to see inflation from the perspective of the producer rather than the consumer and can be broken down into different industries and stages of processing. This differentiation helps in a better understanding of which cost pressures are faced by producers which might later translate into consumer prices.
Based on the selections available in the question, the basket of goods for the PPI would most closely relate to goods and services sold by producers. This index differs from consumer-focused measures such as the Consumer Price Index (CPI), which reflects the prices paid by consumers for a market basket of goods and services. The PPI is a valuable economic indicator for policymakers and economists, as it can signal potential inflation ahead of it reaching the consumer.