Practice Question L8 with answer(1).docx - Chapter 8...

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Chapter 8 Practice Questions 1. What are two ways to define inflation?
2. What is the CPI? How is it calculated? How is it used to calculate the inflation rate?
3. How is the basket of goods used in calculating CPI different from the basket of goods in calculating GDP deflator?
4. What is the difference between the overall inflation rate and the core inflation rate? Why is the distinction made?

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