Question

Core CPI is:

Option 1: The CPI including only food, clothing, and energy.
Option 2: The CPI including only food and energy.
Option 3: The CPI excluding food, clothing, and energy.
Option 4: The CPI excluding food and energy.

Answer 1

Option 4: The CPI excluding food and energy is the correct definition of Core CPI.

Step-by-step explanation:

The correct option for the definition of Core CPI is Option 4: The CPI excluding food and energy.

The Consumer Price Index (CPI) measures changes in the average prices of a basket of goods and services over time. Core CPI is a subset of the CPI that excludes the volatile food and energy prices. By excluding these prices, Core CPI provides a more stable measure of inflation and allows policymakers and economists to get a better understanding of underlying inflation trends.

For example, if gas prices and food prices increased significantly in a certain month, the overall CPI would be higher. However, Core CPI would not include these increases, providing a clearer picture of the underlying inflation rate.

So, the correct answer is option 4.