[Related to the Making the Connection]Even though the core PCE is a better measu

Question

[Related to the Making the Connection]Even though the core PCE is a better measure of the inflation rate than is the CPI, the CPI is still more widely used because the core PCE includes energy and food prices, which do not affect the cost of living of a typical consumer.

A.

True

B.

False

Which of the following are reasons why the federal government uses the CPI when deciding how much to increase Social Security payments to retired workers to keep the purchasing power of the payments from declining?

A.

The CPI continues to be the most widely used measure of inflation.

B.

The core PCE better measures the cost of living.

C.

The government likes to stick it to the people.

D.

None of the above.

Click to select your answer.

Explanation / Answer

Even though the core PCE is a better measure of the inflation rate than is the CPI, the CPI is still more widely used because the core PCE includes energy and food prices, which do not affect the cost of living of a typical consumer.
A.
True

A.
The CPI continues to be the most widely used measure of inflation.

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