Question at position 36 Which of the following price indexes is an alternative measure of the price level to the CPI?Which of the following price indexes is an alternative measure of the price level to the CPI?the core GDP deflator and the CPI deflatorthe GDP deflator and the chained price index for consumptionthe chained price index for consumption and the CPI deflatorthe unbiased CPI and the unbiased GDP deflatorthe GDP deflator and the CPI deflator

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BlackTom AI · Accepted Answer

The question asks for an alternative price index to the CPI that can be used to gauge the overall price level.
Option 1: 'the core GDP deflator and the CPI deflator' — The core GDP deflator is not a standard separate price index often used as an alternative to the CPI; the CPI deflator itself is not a distinct index, it's another name for the price measure used in the CPI, so pairing them is redundant and does not represent an alternative to the CPI.
Option 2: 'the GDP deflator and the chained price index for consumption' — This pair actually matches common alternative measures: the GDP deflator (which covers all domestically produced final goods and services and often yields a different inflation signal than the CPI) and the chained price index for consumption (which is a measure used in the national accounts to track price changes in the consumption component with a chain-weighted approach). These are standard alternatives to the CPI when comparing price levels.
Option 3: 'the chained price index for consumption and the CPI deflator' — The chained price index for consumption is indeed an alternative, but the CPI deflator is essentially another term for the price level used in the CPI, not an independent alternative to CPI itself. Including it makes the pair less about two distinct alternative measures.
Option 4: 'the unbiased CPI and the unbiased GDP deflator' — There is no widely recognized notion of an 'unbiased' CPI or GDP deflator in standard macroeconomics texts; this phrasing appears conceptually unclear and does not reflect established price indexes.
Option 5: 'the GDP deflator and the CPI deflator' — While these are two price measures, the CPI deflator is not a separate, widely used term distinct from the CPI’s standard measure; presenting them together as alternatives does not capture two genuinely alternative measures to the CPI.
Across the options, the combination that aligns with standard practice in macroeconomics as alternative gauges of the overall price level is the GDP deflator alongside the chained price index for consumption. The other options mix terms that are either not truly separate measures or rely on definitions that do not represent standard alternatives to the CPI.

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