Use chain-weighted index to report inflation

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Reference no: EM131164111

1. The Federal Reserve policymakers prefer to use a chain-weighted index to report inflation because:

It dramatically reduces the errors from the overstatement of the fixed weight index and understatement of the deflator.

It makes it difficult for people to figure out the true rate of inflation so policymakers have more time for their policies to have the desired affects.

It corrects for the overstatement of inflation by the GDP deflator.

All of the above.

2. The money aggregate M1 includes each of the following, EXCEPT:

Currency in the hands of the public.

Traveler's checks that have been issued.

Currency in the vaults of commercial banks.

Demand deposits at commercial banks.

Reference no: EM131164111

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