Identify two price indices.
Solution
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Consumer Price Index (CPI): This is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
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Producer Price Index (PPI): This is a family of indices that measures the average change over time in selling prices received by domestic producers for their output. These prices can be for goods at various stages of production: raw goods, intermediate goods, and finished goods.
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