Chapter 13.2, Problem 2R

To determine

To state: The difference between the Consumer Price Index (CPI) and Producer Price Index (PPI).

Explanation of Solution

The difference between the consumer price index and producer price index is as described below:

Index	What it measures
CPI	The change in prices that are spent by an average household in buying the required products and services.
PPI	The change in prices that is charged by the producers for their goods and services.

Table (1)

Economics Concept Introduction

Introduction:

Inflation-An increase in the general price level of products and services for a long period of time in an economy is termed as inflation. In situation of inflation, people spend more money considering it less valuable in future and hence it increases GDP in a shorter time period. The two measures for inflation are consumer price index and producer price index.