17 Questions
What is the purpose of core inflation?
To eliminate transitory effects on the CPI
Which components are typically removed in the calculation of core inflation?
Items affected by supply side factors
How does core inflation differ from regular inflation measures?
It excludes components influenced by supply side factors
Which of the following statements best describes core inflation?
It helps gauge long-term price trends accurately
Why is core inflation considered a more stable measure?
As it removes volatile components like food and energy
What is the main method used to measure inflation today?
Consumer Price Index (CPI)
Why was the term 'inflation' originally used by early economists?
To refer to the devaluation of the currency
What is typically represented by the value '100' in Consumer Price Index (CPI) calculations?
The base year used for comparison
How did the European Central Bank measure food inflation during the COVID-19 pandemic?
By using real-time web scraping of online food prices
In some countries, how is owner-occupied housing (OOH) included in inflation measurement?
By imputing rents
What was a significant factor early economists categorized as influencing the rise or fall of prices?
Currency depreciation
What distinguishes the 'Ex.food and energy' approach to core inflation measurement from other approaches?
It reflects the origin of the concept of core inflation in the United States
How do statistical approaches aim to reduce temporary fluctuations in inflation?
By computing limited influence estimators such as median and/or trimmed means
What is a challenge faced by economic approaches in deriving a measure of core inflation?
Defining core inflation without consensus on the best measure
What do central banks typically exclude in core inflation measures?
Food and energy prices
How can inflation expectations impact economic outcomes?
By influencing instrument instability
Which factor determines the choice of core inflation measurement method?
Economic context and analysis goals
Learn about core inflation, an alternative measure that excludes certain volatile components of the CPI basket affected by supply side factors. Core inflation focuses on eliminating transitory effects on the CPI, providing a clearer understanding of underlying inflation trends.
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