Title: QUIZ: Comparing Consumer Price Index and Producer Price Index
Course: Andria FRE > Section: Comparing Consumer Price Index and Producer Price Index -- FRED® Q & A

Q: How does the volatility of the PPI compare with that of the CPI, according to the article?
- How does the volatility of the PPI compare with that of the CPI, according to the article? (That is incorrect.)
- PPI and CPI have the same volatility. (That is incorrect.)
- PPI appears to be more volatile, at least in recent years. (That's correct!)
- The article doesn't mention any difference in volatility. (That is incorrect.)
A: PPI appears to be more volatile, at least in recent years.

Q: Which of the following best explains why the consumer price index (CPI) and producer price index (PPI) differ in their values?
- CPI measures wholesale prices, while PPI measures retail prices. (That is incorrect.)
- CPI includes intermediate goods, while PPI excludes them. (That is incorrect.)
- CPI and PPI cover different sets of items, including additional costs such as taxes and retail margins. (That's correct!)
- CPI and PPI are identical except for the time of measurement. (That is incorrect.)
A: CPI and PPI cover different sets of items, including additional costs such as taxes and retail margins.

Q: Why does the retailer’s profit margin act as a “cushion” in the relationship between PPI and CPI?
- It reduces the volatility of consumer prices compared with that of producer prices. (That's correct!)
- It ensures that CPI always remains higher than PPI. (That is incorrect.)
- It eliminates the impact of shipping and taxes on CPI. (That is incorrect.)
- It makes CPI and PPI move in perfect correlation. (That is incorrect.)
A: It reduces the volatility of consumer prices compared with that of producer prices.