Final answer:
The Consumer Price Index (CPI) is false as a measure of the quantity of goods and services produced in the economy; instead, it measures the average change over time in the prices of a fixed basket of goods and services, often used to track inflation.
Step-by-step explanation:
The Consumer Price Index (CPI) is not a measure of the quantity of goods and services that the economy is producing. The correct answer to the statement is b)False. Instead, the CPI represents the average change over time in prices paid by urban consumers for a fixed basket of goods and services and is often used as a measure of inflation.
It is a tool that reflects how much incomes must change to maintain a consistent level of consumption satisfaction or utility and is crucial for making various economic decisions by government, businesses, and labor forces. Several other price indices are calculated to measure different aspects of the economy, such as the Producer Price Index (PPI), International Price Index, and GDP deflator, which each serve different purposes.